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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