Hilton Worldwide is now a better buying opportunity for investors than Hyatt Hotels, according to Barclays. Analyst Brandt Montour upgraded shares of Hilton to overweight from equal weight, saying the hotel chain can weather macro challenges better than its peers. The analyst said Hyatt, which he downgraded to equal weight from overweight, is more exposed to China and has little upside from here. “After strong share price performance for H over the last 12 months, we think share valuation now limits upside and are moving to the sidelines. We shift our preference to HLT for its underappreciated net unit growth prospects amid a slowing macro backdrop,” Montour wrote in a Thursday note. Hilton is a “best-in-class” lodging company that has the strongest net unit growth among its competitors, according to the analyst. Montour expects this will be a bigger deal for investors as global revenue per available room decelerates. “Valuation isn’t overly attractive on an absolute basis, but we see tangible drivers for HLT to reaccelerate net unit growth faster than peers to levels that should remain sustainably above peers, and against that backdrop, relative valuation is less demanding,” Montour wrote . “As we move through 2023, and global RevPAR decelerates on tough comparisons and a Fed-induced consumer slowdown, we believe structurally higher net unit growth will demand a more attractive relative valuation multiple than it does today,” Montour added. Both hotel chains are up significantly in 2023. Hilton shares are 16% higher this year, while Hyatt shares are up even more, advancing 32%. The analyst’s $168 price target for Hilton shares, raised from $151 previously, implies about 13% upside from Wednesday’s closing price. Hilton shares are up 0.5% in Thursday premarket trading. Hyatt shares are down about 1.5%. —CNBC’s Michael Bloom contributed to this report.
