Hotel REITs

"Pricing-Inn" a Return to Pre-Covid-19 Levels

Published June 22, 2020

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Key Takeaways


  • After an unprecedented decline in hotel REIT performance and stock prices, investors are left asking “What now?”

  • We answer this by applying bull and bear scenarios to REIT companies to assess potential upside and downside potential.

  • Our bull case assumes the current recovery pace continues and hotels are operating at pre-Covid-19 levels by next year.

  • Our bear case assumes no “second wave” but it does anticipate the hotel recovery will take 4-5 years due to business travel curtailment.

  • At current prices, we find hotel operators like HST, PK, and SVC are pricing in a scenario closer to our bull case, which we think is unlikely and therefore offers investors little upside potential with higher risk.


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