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Hotel stocks have seen a good year-to-date run up this year. I expect these stocks to continue their upward momentum given strong RevPAR (Revenue per available room) trends and improving occupancy rates. I scanned publicly listed Hotel stocks for interesting long candidates and the following three stocks look appealing to me:

Company Ticker

Current Stock Price

YTD Gains

Marriott International, Inc.

(MAR)

36.77

26.05%

Wyndham Worldwide Corporation

(WYN)

52.17

37.90%

InterContinental Hotels Group Plc (IHG)

24.88

38.29%

Here's a look at these stocks in detail.

Marriott International, Inc.

Marriott International, the hospitality major, posted 6% RevPAR in 3Q12 which was lower than the consensus estimate of 7.8%. Despite this RevPAR miss, the company was able to beat the consensus EPS estimate of $0.40 by posting $0.44 earnings per share.

I believe the company's 2013 growth is poised to be stronger than 4Q12 in North America as there will be an increase in Group Bookings, which is up 7% Year/Year and also negotiated corporate rates, which are up 6-7% for 2013. This increase is reflected in the occupancy status of room nights, which is over 50% giving a positive upside for future sales.

Marriott's Incentive Management Fees (IMF) increased ~23% Y/Y last quarter up from ~11% in 2Q12. The operating leverage for higher recovery of IMF is significant, and these fees are forecast to increase by 2014. The company expects incentive fee growth of 20% Y/Y in 2012.

Company's hotel expansion plans are spread over the United States and also internationally. At present it is planning to add ~-35K rooms in 2013 (+11% as compared with +9.8% in 2012) and a total of ~105K rooms over the next three years almost a healthy ~16% increase from its current room base.

As the company is planning its 50% growth outside the U.S., it is majorly focusing on the Asia region. Marriott is looking forward to make a two fold increase in its number of properties in the Asia/Pacific region by 2016. With a current base of 132 hotels in Asia and with 11 lined up for approvals, it totals to 143 properties. Marriott is planning to grow its hotel count by 265 at the end of 2016, with more than 80,000 rooms in 16 countries. With this, the company is maintaining its strong momentum of new hotels in the pipeline, which will increase its footprint and also result in higher revenue.

With strong pipeline of new chains lined up and revenue poised to rise, Marriott is a good buy for medium-term investors.

Wyndham Worldwide Corporation

Wyndham posted 3Q12 EPS of $1.13 beating the consensus estimate of $1.10 EPS. The increase of ~19% Y/Y was driven by proper execution of its plans and a steady cash flow strategy.

Wyndham has always been an investor-friendly company with consistent growth in earnings and EPS. It remains on this same solid turf with its strategy of increasing cash flow, which will generate between $600M - $700M in the next 3 years. The company has already repurchased 1.1 million shares in 3Q12 and is expected to continue with the plan of repurchasing in the range of $150M-$200M worth of shares each quarter. Along with this, its EPS in 2013 is expected to remain $3.90 with an increment of $0.30 because of shares repurchases.

Coming on to its innovative business model, the company has affected a shift toward its "fee-for-service" Wyndham Asset Affiliation Model (WAAM 2.0). The model reflects how the hotel chain is leveraging its existing sales force and expertise, which creates Timeshare sales solutions for the developers and owners of well-situated properties that may have the potential for higher monetization value as a Timeshare destination. This Vocational Ownership segment which is Wyndham's most capital intensive business is expected to constitute 20% of Wyndham's revenue over next three to four years.

Moreover, its current dividend of 1.7% shows an increase of 53% this year and with regular share buyback activity, there is a good upside potential for the stock. In addition to this, it has a forward P/E of 19.98x lower than its peer Marriot's 23.25x and with the Industry's P/E of 23.42x.

Intercontinental Hotels Group Plc

IHG enjoys a dominant geographical position with an exposure in the U.S. and China. With an intention to have a preferred portfolio of brands in developed and emerging markets, it has laid out new planned investments to expand its presence and drive in financial benefit. Included in the plan is an expansion in the Caribbean through its midscale Holiday Inn family of hotel brands and further investment in Holiday Inn Resort Aruba to renovate 597 rooms in the resort destination. Further in the pipeline are new midrange brands in the U.S. (EVEN Hotel) and the 5-star Chinese brand (Hualuxe). Given its global leadership in terms of number of rooms (670,000) it has the largest expansion plan globally with 170,000 rooms in the pipeline.

Its well-known hotel brands around the globe, i.e. InterContinental and Holiday Inn offer, value to hotel owners with its different brand positioning, impressive customer loyalty programs and a strong reservation system. With its brand equity being a significant growth engine, it allows hotel owners to charge higher rates, which ultimately are incremental to financial and brand value.

Further, IHG has paid out over $500 million in dividends since 2008 and in addition to this, will return $500mn through a special dividend with a share consolidation and another $500mn through a share buyback.

Source: 3 Hotel Stocks With Strong Momentum To Buy