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Market Overview

Real Estate Lodging Sector Outlook in 2010 and beyond (HOT, WOLF, JLL, HST)


Stocks of the real estate lodging sector are on a path to recovery from 2009 after a decline of 51.6% in 2008 and will continue to increase as the growth cycle for this sector looks robust even a few years beyond 2011.

Analysts William A. Crow, Paul D. Puryear, Dan Amer, and Jeff Koche have recommended investors have a long term strategy extending beyond 2011 for this sector. They expect the lodging sector to ring up 10-15% in 2010 itself. This growth is expected to be achieved beyond the half year of 2010.

Analysts are optimistic about the business transient and group travel segments in this sector and hence raised the market rating of Starwood Hotels & Resorts (NYSE: HOT) from Market Perform to Outperform. Starwood is the top performer in this segment.

On the other hand, they have downgraded shares of Great Wolf Resorts (NASDAQ: WOLF) from Outperform to Market Perform because its RevPAR showed decline. This is because Wolf followed a leisure focused strategy rather than business travel.

The analysts are also positive about Real Estate Investment Trusts (REITs) as they have the capability to capitalize on the growth in the real estate sector in late 2010 and on opportunities to grow their portfolio via acquisitions at discounts to replacement costs. Jones Lang LaSalle Inc, (NYSE: JLL) and Host Hotel & Resorts (NYSE: HST) are the top performers in this segment. Hence the analysts have recommended investors bet on LaSalle and Host within this segment.


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