Lodging stocks have notably underperformed the wider market in recent weeks despite a generally positive second-quarter reporting season for the sector. While most lodging and timeshare operators posted results that beat expectations and moved to raise fiscal 2026 estimates, share prices largely weakened around earnings releases as investors grappled with more cautious second-half outlooks.
Morgan Stanley’s analyst team interprets the market reaction as an opening to accumulate select names. The firm argues that forward valuations now embed more conservative assumptions for revenue per available room - RevPAR - growth over the next two years, and that earnings upside is becoming more visible for companies with asset-light models and strong fee mixes.
Across Morgan Stanley’s coverage, the bank modestly raised its forecasts and now models 4% RevPAR growth for 2026 and 3% for 2027, while expecting unit growth to pick up in 2027. The analysts note that, before earnings, market valuations implied mid-single digit RevPAR outcomes, suggesting stocks had already priced in stronger near-term demand than recent second-half guidance supported.
Top names highlighted by Morgan Stanley
The firm outlines five lodging names it views as most attractive on a risk-reward basis given recent price moves and operating characteristics.
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Hilton (HLT) - Morgan Stanley points to Hilton’s favorable mix of RevPAR, rooms growth and fee income as the cleanest among peers. The bank cites Hilton’s high visibility and asset-light structure as factors that should support high-teens earnings per share growth even if RevPAR growth decelerates. Hilton reportedly has one of the largest shares of franchise fees plus variable management fees among corporate competitors.
The company has consistently produced net unit growth near the top of the publicly traded peer set. Morgan Stanley highlights that the in-construction pipeline amounts to roughly 19% of existing rooms, a base that the analysts say supports 6% or greater room growth over the next three years. Hilton’s second-quarter adjusted earnings and revenue were slightly ahead of Wall Street expectations, and the operator raised its full-year RevPAR outlook following the results.
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Marriott (MAR) - Morgan Stanley emphasizes how Marriott’s cobrand partnerships and development pipeline are driving stronger rooms growth. Over the last decade, Marriott has reduced direct real-estate ownership, spun off its timeshare business and shifted contracts to more variable fee structures. The analysts say these strategic moves lower cyclicality and should support a re-rating away from a ‘‘high beta’’ characterization.
Marriott’s scale, combined with its Bonvoy loyalty program and app, provides channels for additional non-RevPAR fee growth. In the most recent quarter, Marriott reported adjusted earnings that beat forecasts while revenue was slightly below expectations. The company also increased its full-year gross fee revenue guidance and completed a $1.25 billion notes issuance.
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Hyatt (H) - Morgan Stanley highlights Hyatt’s positioning at the upper end of the market and its ongoing shift to an asset-light model. That transition has coincided with an inflection in free cash flow per share and valuation improvement, according to the analysts. Morgan Stanley expects Hyatt to generate in excess of $1,200 million and $1,400 million in EBITDA for 2026 and 2027, respectively, implying pro forma leverage of roughly 2.5 times before accounting for buybacks.
Hyatt’s second-quarter adjusted earnings of $1.12 per share beat analyst estimates, although revenue for the period fell short of forecasts.
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Travel + Leisure (TNL) - The analysts single out Travel + Leisure for its recent acquisition activity and expansion of brands, factors they believe position the company for earnings beats and a potential re-rating. The company’s shift to focus on guests with higher FICO scores is described as contributing to owner growth improvements and the potential for structurally lower defaults and provisions.
From a valuation perspective, Travel + Leisure trades at roughly 9.0 times next-twelve-months price-to-earnings and delivers over a 10% free cash flow yield, per Morgan Stanley. In the second quarter, the company reported revenue that exceeded estimates, with adjusted earnings per share coming in just below forecasts, and it raised its full-year outlook after the quarter.
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Wyndham (WH) - Morgan Stanley views Wyndham as a company with accelerating room growth and a capital-efficient franchise model that could prompt a re-rating. The firm emphasizes Wyndham’s focus on lower-end chain scales, which the analysts believe have shown greater resilience through economic cycles, limiting downside and enhancing risk-reward for shareholders.
Wyndham reported second-quarter adjusted earnings that topped Wall Street expectations, while its revenue for the quarter was below forecasts.
Context and analyst approach
Morgan Stanley’s recommendations reflect a view that market weakness following earnings has priced in a more cautious near-term outlook, opening the door to buying names that combine growth in rooms, attractive fee mixes, and asset-light operating models. The bank’s modest upward revision to RevPAR assumptions for 2026 and 2027 - to 4% and 3% respectively - and an expectation of accelerating unit growth in 2027 underpin its selections.
Importantly, Morgan Stanley notes that stock valuations ahead of earnings had implied mid-single digit RevPAR expectations, a level that in some cases exceeded the companies’ own second-half guidance. The analysts therefore see scope for upside where actual results and guidance remain supportive, particularly for operators with strong unit pipelines and higher fee income exposure.
What investors should note
- Most lodging and timeshare companies beat second-quarter expectations and lifted fiscal 2026 guidance, yet equity performance around earnings was broadly negative.
- Morgan Stanley increased sector estimates modestly and now models 4% RevPAR growth in 2026 and 3% in 2027, with unit growth accelerating in 2027.
- Selected names were highlighted for their combination of unit growth potential, fee income mix, and asset-light business models.
While the market digests mixed signals between stronger-than-expected quarterly results and more moderate forward commentary, Morgan Stanley’s view is that the recent pullback has created targeted buying opportunities among well-positioned lodging operators.