Lodging stocks underperformed the broader market in the month following second-quarter earnings despite improved outlooks, as investors digested more conservative second-half guidance. Morgan Stanley modestly raised its estimates for the sector, projecting 4% and 3% Revenue per Available Room (RevPAR) growth for 2026 and 2027, respectively, up from mid-single-digit expectations implied by pre-earnings valuations.
Analysts highlighted the asset-light franchise model as a key differentiator, with unit growth expected to accelerate in 2027. Among the top picks, Hilton (HLT) maintained its position as a leader in franchise fees and variable management income, supported by a construction pipeline representing roughly 19% of existing rooms and projected 6%+ annual growth over the next three years. The company reported second-quarter adjusted earnings and revenue slightly above forecasts and raised its full-year RevPAR outlook.
Marriott International (MAR) posted adjusted earnings that beat estimates, though revenue fell short of expectations. The company raised its full-year gross fee revenue guidance and completed a $1.25 billion notes issuance. Analysts noted Marriott’s scale in cobrand partnerships and loyalty programs as drivers of non-RevPAR fee growth potential.
Hyatt Hotels (H) reported adjusted earnings of $1.12 per share for the quarter, exceeding projections, while revenue missed forecasts. Morgan Stanley projects Hyatt will generate over $1.2 billion in EBITDA for 2026 and over $1.4 billion in 2027, with leverage expected to remain around 2.5 times before buybacks. The shift toward an asset-light model is seen as a catalyst for free cash flow per share and valuation expansion.
Travel + Leisure Co. (TNL) raised its full-year outlook after reporting revenue above estimates, though adjusted earnings per share came in just below forecasts. The company cited stronger operating performance and contributions from recent acquisitions. Analysts highlighted its pivot toward higher FICO score customers, which is improving owner growth and reducing default risk.
Wyndham Hotels & Resorts topped Wall Street expectations for adjusted earnings but fell short on revenue. The company’s focus on lower-end chainscales and capital-efficient growth models is viewed as resilient across economic cycles, supporting its risk-reward profile.
Morgan Stanley’s upgrades reflect a tempered but improving outlook for the lodging sector, with franchise-driven models and strategic shifts positioning select names for outperformance despite near-term caution.
