Airbnb is a story of incredible growth, but it’s not the only way to play on the surge in travel and leisure demand, as COVID-19 restrictions have eased and the busy summer travel season begins . Although Airbnb is a real estate-focused stock, it is not a real estate investment trust or REIT, pays no dividends, and does not actually own any real estate assets.
With that in mind, here are three great real estate stocks that could benefit hugely from strong travel demand in the years to come.
People have missed experiences, and this company could be a winner
REP properties (REP 0.39%) is a REIT that focuses on experiential properties. It has cinemas, dining and gaming venues (TopGolf is a major tenant), ski resorts and experiential accommodations. As an example of the latter, he owns the new Margaritaville Hotel in Nashville. Its tenants typically sign long-term leases with incremental rent increases.
EPR wisely paused growth spending during the worst of the COVID-19 pandemic shutdowns, but is now poised to return to growth mode. The company sees a $100 billion exploitable opportunity and has specifically named gambling properties, cultural attractions and more as exciting avenues for expansion.
With over $1.3 billion in cash and an excellent balance sheet, this $3.8 billion REIT is in a great position to take advantage of opportunities as it sees fit. And to make it even better, the company pays out a generous 6.5% dividend yield in monthly installments.
An incredible rebound and a lot of growth potential
Ryman Hospitality Properties (HRP 0.48%) was greatly disrupted by the start of the pandemic. The company has five large-scale hotel properties under the Gaylord brand that focus on group events. It also has an entertainment division which owns several live performance venues and other related assets.
So far in 2022, Ryman’s hotel business has returned faster than management expected. Occupancy at Gaylord hotels hit 71% in April, the highest rate since the start of the pandemic, and the average daily room rate is now 17% higher than pre-pandemic levels. Impressively, group travel to properties rebounded to 88% of comparable 2019 levels.
The entertainment division (formerly known as Opry Entertainment Group) is a particularly attractive growth opportunity. NBCUniversal and Atairos recently agreed to buy 30% of the entertainment business, and Ryman just completed the acquisition of Block 21 in Austin. The company’s Ole Red dining and entertainment chain is making impressive strides, and there could be a lot more growth in store.
Americans splurge on travel, and this hotel park could be a winner
Airbnb has disrupted travel, but that doesn’t mean no one wants to stay in high-end luxury hotels anymore. In fact, recent numbers show that people are willing to splurge.
Xenia Hotels & Resorts (XHR 1.33%) owns and operates a portfolio of luxury hotels under brands such as Marriott, Kimpton, Fairmont, etc. It has 34 hotels in total, with more than 9,800 rooms.
Similar to Ryman, Xenia’s occupancy has rebounded strongly this year, with 72% of rooms full in April and average daily rates 18% higher than comparable pre-COVID levels. With the summer travel season just beginning, this could be the start of an impressive rebound for Xenia and the luxury hotel industry in general.
A word of warning
While all three companies should benefit from travel demand, it is important to point out that these companies (particularly the two hotel REITs) are likely to be somewhat cyclical. If a recession hits and consumer spending slows, hotel occupancy may suffer in the short term.
To be perfectly clear, all three are excellent, well-run businesses that should do well in the long run. However, it is wise to expect some volatility in tough economic times.