Sector Snap: Hotel companies advance

Shares of most publicly traded hotel companies gained on Thursday after a Goldman Sachs analyst upgraded the sector to "Attractive" from "Neutral."

Steven Kent cited the shrinking supply pipeline, cost containment programs throughout the industry and easier revenue comparisons in the second half of the year.

Additionally, Kent upgraded Starwood Hotels & Resorts Worldwide Inc. to "Buy" from "Sell." The stock gained $1.14, or 5.1 percent, to $23.52 in afternoon trading. It has traded between $8.99 and $50.89 during the past 52 weeks.

Kent noted that Wall Street's earnings expectations for the hotel sector have been cut so low that beating them could become the standard. The analyst said, however, that he expects revenue per available room to remain negative for the next few quarters.

Revenue per available room, or revpar, is a key gauge of an hotelier's performance because it measures both occupancy and room rate.

Kent said Starwood should benefit from its greater operating leverage as the supply pipeline continues to decline and revpar begins to recover. He also highly recommended shares of Marriott International Inc.

Marriott shares rose 54 cents, or 2.4 percent, to $22.97. During the past 52 weeks, the stock has traded between $11.88 and $34.66.

His only "Sell" rating in the sector is on Gaylord Entertainment Co., which owns a network of meetings-focused resorts and country music's Grand Ole Opry. Kent noted that Gaylord's contracts are typically booked one to three years in advance so discounts offered now may weigh on results over a longer-term period.

Gaylord's stock also rose, gaining 21 cents to $13.79.