Hotels and Travel: positive investor sentiment with some notable exceptions

As the festive season approaches, we ask whether people are keen to get away from it all. The global hotel industry has picked up momentum this year with a diversity of strategies in play, fuelling recovery by expansion and growth in Asia. Efforts seem to be paying off as hoteliers’ shares have consistently outperformed. We look at securities lending data to see investor sentiment in Marriott International Inc (NYSE:MAR), Starwood Hotels and Resorts Worldwide Inc (NYSE:HOT), Wyndham Worldwide Corp (NYSE:WYN), Intercontinental Hotels group (LON: IHG), Whitbread Plc (LON:WTB), Tui Travel (LON:TT) and Thomas Cook Group (LON:TCG).

Before I start, please remember to sign up for our first ever Holiday Smackdown quiz at www.dataexplorers.com/quiz to join the challenge on Tuesday, 14 December at 9am EST (2pm GMT). The winning team gets a case of champagne or a donation to your favorite charity.

The industry bellwether, Marriott International has been rerated recently to investment-grade territory by Fitch Ratings and the shares are up well over 50% this year. Observing how much is in the hands of large, long term investors who lend their shares as a proxy for institutional ownership, we are able to gauge positive investor sentiment in the stock. Funds who lend have increased their holdings from 68 million to 80 million shares since the low in March. Short sellers have held their positions after short interest increased from 6% to 8% of total shares over July.

This unusual radio silence from short sellers who are generally quite opinionated through their activity towards Marriott seems to be trending through the sector. Short interest in Starwood Hotels and Resorts Worldwide Inc built up from 4% to 8% over July and August but has since steadied at 7% indicating that short sellers maybe adopting a wait and see approach. Meanwhile institutional investors are busy hoarding stock, resulting in institutional ownership reaching new annual highs of 31% of shares outstanding on loan.

Wyndham Worldwide Corp has seen contrasting investor sentiment from the short and long sides of the market. The company, which has a wide exposure to Europe, has seen short sellers covering positions in September when short interest peaked at 7% of total shares. This has receded to an unprecedented low of 0.8%. However, funds who lend have tempered their support and institutional ownership hit an annual low of 65 million shares in November, although this still represents an impressive 38% of total shares.

The shares of UK listed Intercontinental Hotels Group have soared over the past year as short interest has declined from 9% to virtually zero while institutional ownership has increased from 47 million shares to 57 million shares since March. Whitbread Plc, which owns a budget hotel chain, is thinly traded amongst short sellers. Ownership amongst long-only institutional investors has decreased from 42 million to 37 million shares since the second quarter.

For a perspective on investor sentiment in European travel markets we look at two of the leading European listed travel operators Tui Travel and Thomas Cook. Short sellers have been covering their positions in Tui Travel with short interest almost halving from May to standing at 7.5% of shares outstanding on loan. Thomas Cook has marginally lower short interest at 5.5% of total shares, but this has been rising from a low of 1% recorded in June.

Investor sentiment across the travel sector remains varied whilst the hotel industry is showing steady signs of growing investor confidence but short sellers may require further convincing.

For users of the Bloomberg terminal, we have attached a brief User Guide which illustrates how to conduct analysis on one of the stocks featured above. Click here