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Why Hyatt, Marriott, and Park Hotels Stocks Are Sinking Today

By Rich Smith – Apr 3, 2020 at 3:23PM

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A deep recession won't be good for business.

What happened

Shares of hoteliers are taking it on the chin today, with Hyatt Hotels (H -0.47%) stock down 3.1%, Marriott International (MAR -0.26%) off 5.4%, and Park Hotels & Resorts (PK 0.09%) falling 7.7% as of 2:30 p.m. EDT Friday. Earlier today, all three stocks were down much more, with Park dropping nearly 13%.

Sorry we're closed sign hung on a white brick wall.

Image source: Getty Images.

So what

There doesn't seem to be any news about these three stocks today. But the past couple of days have seen a wave of bad economic news that promises to damage stocks broadly, and hotel stocks should be no exception.

  • On Wednesday, the U.N. Department of Economic and Social Affairs warned that global gross domestic product (GDP) is likely to shrink nearly 1% this year.  
  • On Thursday, Fitch Ratings basically doubled that prediction, saying we're in the midst of what will become a "deep" recession in which global GDP will fall 1.9%.
  • In the U.S. specifically, Morgan Stanley warns that real GDP could fall 5.5% in 2020.
  • While Bank of America thinks the situation will be even worse: The "deepest recession on record" will cause U.S. GDP to fall 10.4% this year.

Now what

What does this mean for hotel stocks? Fewer companies earning less profit will send fewer managers to stay at hotels on business trips. Former employees of companies, laid off from their jobs, won't have money for vacations this year.

And all of this is what happens after hotels reopen for business. Right now, we're still in the phase where hoteliers are closing their hotels and furloughing staff members because almost no one is booking stays in hotels.  

This is why hotel stocks are down today: The situation is bad now, and even when it gets better, business is probably still going to be pretty miserable for some time to come.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Hyatt Hotels and Marriott International. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Marriott International, Inc. Stock Quote
Marriott International, Inc.
$140.14 (-0.26%) $0.37
Hyatt Hotels Corporation Stock Quote
Hyatt Hotels Corporation
$80.96 (-0.47%) $0.38
Park Hotels & Resorts Inc. Stock Quote
Park Hotels & Resorts Inc.
$11.26 (0.09%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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