Assessing the Rebound in the Hospitality Sector: Is Now the Time to Buy Premium Hotel Stocks Like Marriott and Hilton?

The hospitality sector's post-pandemic recovery has been a rollercoaster of resilience and uncertainty. By 2024, global market growth had surged to $4.9 trillion, with the U.S. Accommodation and Food Services sector alone generating $1.6 trillion in revenue-surpassing 2019 levels according to market analysis. Yet, as 2025 unfolds, the narrative shifts. While the sector's long-term outlook remains optimistic, with projected revenues reaching $1.9 trillion by 2029, near-term headwinds-including trade tensions, elevated interest rates, and competition from short-term rentals-are tempering growth. For investors considering premium hotel stocks like Marriott (MAR) and Hilton (HLT), the question is no longer if the sector will recover, but when to act-and whether current valuations justify the risk.

A Mixed Recovery: Regional Divergence and Segmental Shifts

The 2025 global RevPAR (Revenue Per Available Room) landscape reveals a fragmented recovery. The U.S. market, once a bellwether for global demand, is projected to see near-stagnant growth of 0.1% in 2025, with luxury and urban hotels outperforming midscale and economy segments. For instance, luxury-tier U.S. hotels achieved 4.2% year-over-year RevPAR growth in 2025, while the economy segment lagged at 1.9%. This bifurcation mirrors broader consumer trends: high-net-worth travelers and workation demand are sustaining premium properties, while business and group travel remain soft.

Regionally, the U.S. faces unique challenges. A less active hurricane season and fewer election-related events have dampened demand, while Canada and Northern Latin America shine. Canada's 2025 RevPAR growth is forecast at 2.4%, driven by robust inbound and domestic travel, and Mexico, Costa Rica, and the Dominican Republic are seeing record international arrivals. Meanwhile, Asia-Pacific is on track to exceed 2019 levels by 2.6% in 2025, buoyed by Japan, Korea, and India's tourism rebounds.

Financial Health of Premium Players: Debt, Earnings, and Valuation

Marriott and Hilton, two of the sector's largest players, present a mixed financial picture. Marriott's third-quarter 2025 results showed global RevPAR growth of 0.5%, driven by international markets, though U.S. and Canadian RevPAR declined by 0.4%. The company's adjusted EBITDA rose 10% year-over-year to $1.35 billion, but its debt-to-equity ratio of -5.28-far exceeding the sector average of 4.02 according to financial analysis-signals significant leverage. Similarly, Hilton's debt-to-equity ratio of -250.4% is alarming, reflecting a reliance on debt financing that could strain margins in a low-growth environment.

Valuation metrics add nuance. As of December 2025, Marriott's P/E ratio stands at 31.13, 15% below its 10-year average of 36.68. This is higher than the Consumer Cyclical sector average of 19.2 according to market data, suggesting the market is pricing in caution. Hilton's P/E ratio of 39.12 according to financial analysis is similarly elevated, though it has fallen 53% from its 10-year average. The broader hospitality sector's P/E ratio of 33.1x according to market data is a discount to its three-year average of 116x, indicating potential undervaluation amid macroeconomic uncertainty.

Strategic Sector Rotation: Timing the Entry

For investors considering sector rotation into hospitality, timing is critical. The sector's current P/E ratio of 33.1x is significantly lower than its historical averages, suggesting a potential inflection point. However, this must be weighed against near-term risks. CBRE forecasts negative RevPAR growth for H2 2025 (-0.6%), driven by occupancy declines and inflationary pressures. Meanwhile, operating costs and labor shortages continue to erode margins according to industry benchmarks.

Premium stocks like Marriott and Hilton offer exposure to the sector's long-term growth drivers-luxury demand, wellness tourism, and workation trends-but their high leverage amplifies downside risk. A strategic entry might prioritize companies with stronger balance sheets or those benefiting from regional outperformance (e.g., Canada or Asia-Pacific). For instance, Host Hotels & Resorts (HST), with a debt-to-equity ratio of 0.76, represents a healthier risk profile compared to highly leveraged peers.

Conclusion: A Calculated Bet

The hospitality sector's post-pandemic rebound is far from complete, but its long-term fundamentals remain intact. With global GDP contributions at 10% and demand for premium experiences rising, the sector offers compelling growth potential. However, investors must tread carefully. Premium hotel stocks like Marriott and Hilton are trading at discounts to historical valuations, but their high debt loads and uneven regional performance require a nuanced approach. For those with a medium-term horizon and a tolerance for volatility, a strategic entry-focusing on companies with resilient segments (e.g., luxury) and diversified regional exposure-could position portfolios to capitalize on the sector's eventual normalization.