There's no doubt about it -- although the COVID-19 pandemic isn't quite over just yet, life is starting to get back to normal throughout the United States. Pent-up demand is causing flights and rental cars to sell out, and hotel rooms are getting significantly more expensive.
A real estate investment trust, or REIT, like Park Hotels & Resorts (NYSE: PK), could be an interesting way to get exposure to the pent-up demand for travel in your stock portfolio. Here's a bit about Park Hotels & Resorts, why it could be an interesting stock to invest in, and whether it could be a smart buy now.
Park Hotels & Resorts in a nutshell
If you want a full rundown of Park Hotels & Resorts' investment strategy, check out this deep dive. But here's the general idea.
Park Hotels & Resorts is one of the largest hotel REITs in the market, with a specific focus on high-end and luxury properties. Among its portfolio of about 60 hotels, you'll find mostly Hilton brands (the company itself was a spin-off from Hilton in 2017). Just to name a few of its more iconic properties, the Waldorf Astoria Orlando, Hilton Hawaiian Village Waikiki Beach Resort, and the Casa Marina in Key West.
There's no doubt about it -- people want to travel
Over the past few weeks, travel demand has started to recover dramatically. Just recently, United (NYSE: UAW) and Delta (NYSE: DAL) said that bookings have recovered better than expected, and Delta even went so far as to say that domestic travel demand has hit pre-pandemic levels. You also might have noticed that prices for rental cars have gone through the roof lately -- if you can find one.
After more than a year of lockdowns, capacity restrictions, mask mandates, and other COVID-19 restrictions, it's clear that people want to get out and take vacations, visit family, and generally get out and do things. And hotels could be a big beneficiary.
Is the stock still a good buy?
To be fair, there's obviously quite a bit of the "good times ahead" already reflected in the stock price. In fact, as soon as we started to see positive vaccine data back in November, Park and most other hotel REITs started to rocket higher, and we've seen another leg up as the vaccine rollout has happened faster than many people had expected. In all, the stock is up by about 97% over the past year.
However, there could still be more upside ahead as things actually start to return to normal travel volumes and restrictions continue to ease. For example, many major tourism destinations such as New York City and resorts like Walt Disney World are still operating with some restrictions, and as these limitations ease, it should result in rising demand for hotels. And that's not to mention business and group (conference/convention) travel, which hasn't really started to resume yet, but will likely do so within the next couple months.
The point is that while Park Hotels & Resorts isn't exactly the bargain that it was at this time last year, don't let the rebound we've seen since late 2020 scare you away from great reopening plays like this. It's also worth noting that even after nearly doubling over the past year, Park Hotels is still trading for significantly less than it was before the pandemic, so it could still have a long way to go as the reopening continues.