Shares of hotel chain giant Marriott International (NASDAQ:MAR) dropped 6% in early trading Tuesday, followed by even bigger drops of 10% and 12% at casino operator MGM Resorts (NYSE:MGM) and hotel REIT stock Park Hotels & Resorts (NYSE:PK). As of 11:20 a.m. EDT, Marriott is off only 4.1%, MGM is down 5.7%, and Park is down 3.6%.
But why did these three hotel stocks fall in the first place?
If you look at the news feeds, there's no bad news to be found on any of these three hotel stocks -- not by name, anyway. In fact, quite to the contrary. Today, shares of Marriott stock got a boost from a new $110 price target at RBC Capital, which called Marriott a top-tier lodging company that is taking market share from its rivals, according to TheFly.com.
And just yesterday, shares of Park Hotels & Resorts won an upgrade to an outperform rating at investment bank Raymond James, which called the company's valuation "positive" at just 7.1 times forward earnings, and predicted the company's hefty financial leverage ($3.8 billion in net debt on a company with a market cap of just $3.1 billion is pretty leveraged) would help the stock outperform in an economic recovery.
Meanwhile, over the weekend, Barron's encouraged investors to look at MGM as a promising play on Las Vegas reopening for business.
After multiple days of mostly higher closings for the stock market, The Wall Street Journal observed overnight that the Nasdaq has just claimed a new all-time high for the first time since the COVID-19 pandemic began, while the S&P 500 has at long last erased its losses for the year.
This sounds like great news, but has the coronavirus been cured and no one thought to mention it? Has a vaccine against COVID-19 been discovered, run through phase 3 trials, and proven both effective and safe for people to take? And most pertinently, has hotel occupancy climbed past the 32% level marked in May, and reached the 37% occupancy level required for most hotels to at least break even -- much less earn a profit from their business?
Of course, those things haven't happened. Until they do, I have to assume that Marriott, MGM, and Park are still losing money -- and investors still have plenty of reason to sell.