Hotel REITs: Time To Get Away?
Fueled by vaccines and fiscal firepower, the United States has emerged as the clear global leader of the post-pandemic economic recovery, powering a robust recovery in domestic leisure travel.
TSA data showed that domestic travel has recovered to 75% of pre-pandemic levels after bottoming at under 5%. STR reported that hotel occupancy has recovered to 90% of pre-pandemic levels.
Following a brisk post-vaccine share price recovery, hotel REITs and the broader hospitality industry have stalled over the last quarter amid renewed concerns over COVID variants abroad.
While the recovery in domestic leisure travel is nearly complete, international tourism will likely remain depressed and recent outbreaks suggest risks are skewed to the downside for the hospitality industry.
Hotel REITs are not out-of-the-woods, but we've become more bullish on the long-term outlook for domestic business travel. We see pockets of value in leisure-oriented hotel REITs focusing on Sunbelt markets.
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