By: April Thompson
Added: 21st June 2019
5 Best Performing Hotel REITs
- Ryman Hospitality Properties (RHP)-Ryman has experienced the greatest total return over the last 5 years at 19.98%, which is more than double the return of its closest peer. RHP continues to perform at a high level. RevPAR grew 2.9% in 2018, and Total RevPAR grew 4.0%. Revenue is forecast to continue to grow at a similar pace in 2019. (Total RevPAR includes food & beverage, and other ancillary revenues.) The REIT specializes in group-oriented, destination hotel assets in urban and resort markets. The REIT owns 4 large conference focused hotels with a total of 7,805 rooms. RHP also owns several other hotel assets managed by Marriott, and other media and entertainment assets in Nashville, including the Ryman Auditorium. (Ryman Hospitality Properties, 2019)
- Summit Hotel Properties (INN)-Strategically focused on hotels with premium brands and efficient operating models, INN owns 77 hotels in 26 states, encompassing 11,659 guestrooms. INN trades on the NYSE, and is headquartered in Austin, TX. EBITDA is distributed across premium brands, such as: Marriott (54.4%), Hilton (22.2%) and Hyatt (17.5%). (Summit Hotel Properties Investor Presentation, 2018). The average effective age of the portfolio is 3.3 years. INN has produced a total return of 9.4% over the last 5 years. RevPAR grew by 0.8% in 2018, with growth concentrated primarily in the Atlanta market. Atlanta represents 19% growth, due primarily to growth of a premium Marriott affiliated asset in the market. The company expects 2019 performance to be in line with 2018.
- Chesapeake Lodging Trust (CHSP)-CHSP owns 20 hotels, including 6,279 rooms. 25% of portfolio EBITDA is located among four hotels in the San Francisco market, with the remaining portfolio disbursed geographically in top US markets (i.e. New York, Chicago, Los Angeles, etc.) 90% of rooms are in the upscale and luxury segments. Aligned with brands with strong loyalty programs including Marriott (53%), Hyatt (25%) and Hilton (16%). CHSP has experienced total growth of 9.02% over the last 5 years, making them third among peers.
- Hospitalities Properties Trust (HPT)-Listed on the NASDAQ as HPT, Hospitalities Properties Trust owns 325 hotels operated under 21 brands. HPT saw a reduction in RevPAR in 2018 of .08% due primarily to a reduction in occupancy of 1.8%. Ownership is spread across full service, select service and extended stay hotels. HPT also has ownership in 199 travel centers operating under Travel Centers of America and Petro brands disbursed geographically throughout 45 states, Puerto Rico and Ontario. (Hospitalities Properties Trust, 2019) HPT is also among the 5 largest hotel REITs by market cap and is discussed again below as one of the largest hotel REITs.
- Sotherly Hotels(SOHO)-SOHO owns 12 hotels including 3,011 rooms, located primarily in the southern US. The company specializes in acquiring, renovating, rebranding and repositioning hotel assets, and is known for bringing southern hospitality to the hospitality industry. The company was founded in 2004, and is headquartered in Williamsburg, VA. The company is self-managed and self-administered, and continues to outperform most peers. (Sotherly Hotels, 2019)
Largest Hotel REITs by Market Cap
- Host Hotels & Resorts (HST)-The largest publicly traded Hotel REIT by market cap, HST owns premium luxury hotels in prime locations. Appreciation in asset values, growth in earnings and dividend distributions is their value proposition to shareholders. As of 12/31/2018 the REIT owned 85 hotels, encompassing 47,455 rooms. 80 assets are in the US, while 5 are located internationally. HST saw a 2.0% increase in RevPAR in 2018 and expects similar growth in 2019.
- Park Hotels and Resorts (PK)-52 premium branded hotels and resorts, 31,000 rooms. PK focuses on diversifying the portfolio across offerings, including high barrier to entry urban markets, convention hotels, landmark resorts and select suburban and strategic airport hotels. PK saw a 2.9% increase in RevPAR in 2018 and expects to continue to trend favorably in 2019. (Park Hotels and Resorts, 2019)
- Pebblebrook Hotel Trust (PEB)-Acquires and invests in upper upscale hotels in US gateway cities. The REIT owns 61 hotels with 14,575 rooms. 57% of 2018 EBITDA was concentrated in West Coast markets. PK focuses on acquiring where operational and redevelopment opportunities exist and promotes an extensive research process prior to investing. Kimpton and Marriott are their largest partners each with 14% of the portfolio. The REIT saw RevPAR grow 1% and expects to be in a range of 1%-3% in 2019. (Pebblebrook Hotels, 2019)
- Hospitalities Properties Trust (HPT)-As detailed above, this REIT owns both hotels and travel centers. With a market cap of $4,381M, HPT is the fourth largest REIT in the hotel subsector. The REIT underperformed considerably relative to peers in 2018 but remains one of the strongest performers in the subsector over the long term. (Hospitalities Properties Trust, 2019)
- Ryman Hospitality Properties (RHP)-As discussed earlier, RHP is the best performing REIT over the last five years, and the fifth largest hotel REIT with a market cap of $4,115M. RevPAR increased 2.9% in 2018 due primarily to higher rates. Occupancy decreased .2%. The REIT focuses on convention assets, in centrally located markets.