Certainly, lodging companies had a rough 2020. Governments imposed restrictions throughout the year that forced them to close their doors and limit the number of guests when they were permitted to open.

But there is hope that the worst is behind the industry as new COVID-19 infections have declined since the start of the year and people receive vaccinations. No one really knows how much travel will rebound, but it seems likely companies will continue with remote meetings, at least to some extent, as a way to save time and money.

The market seems to have an optimistic take on Hilton Worldwide Holdings (HLT -1.48%), Marriott International (MAR -0.28%), and Wyndham Hotels & Resorts (WH 0.96%) with share price gains of 61%, 59%, and 80%, respectively. Most of the appreciation has come within the last few months as governments have approved and begun distributing vaccines. These three stocks beat the S&P 500, which had a 45% increase.

It's time to look closer at the three hotel companies to see which, if any, can continue with this market-beating performance.

A digital stock graph with lounge chairs in the background.

Image source: Getty Images.

Hilton Worldwide Holdings

Hilton markets its properties toward the higher end of the market. These include brands like Waldorf Astoria, LXR, and its namesake Hilton Hotels & Resorts. It doesn't actually own most of them, though. Instead, it franchises or operates the hotels under management agreements. Out of its roughly 1 million rooms, it operated about 23% under management agreements and 76% under franchise arrangements.

This allows Hilton to operate an "asset-light" business whereby it doesn't invest in capital improvements or incur hotel operating costs. The company receives a portion of the property's revenue, and in the case of those it manages, a piece of the operating income if it meets a certain threshold.

Hence, Hilton is still reliant on the property attracting guests. Last year was obviously challenging, and its fourth-quarter revenue dropped by 62% to $890 million.

While everyone is hoping for better days, its higher-end brands may not see a fast bounce back as the economy struggles to get back on its feet, hurting both business and personal travel.

Marriott International

Marriott is a collection of 30 brands that include select (e.g., Courtyard, about 46% of rooms), premium (e.g., Marriott, Sheraton, about 43% of rooms), and luxury (e.g., JW Marriott, Ritz-Carlton, about 9% of rooms) categories. Like Hilton, it operates about 99% of these properties under franchise and management contracts.

On top of last year's pandemic, Marriott is also contending with CEO Arne Sorenson's unexpected passing last month. The stock shrugged off this news and weak fourth-quarter results in the hopes of better days ahead. During the latest period, revenue dropped by 60% to $2.2 billion.

Its properties in China, the first region affected by the pandemic, may provide a clue into how quickly the rest of Marriott's regions will recover. Those hotels reached a 60% occupancy level in July, where it remained for the second half of 2020. The region ended 2019 with around 71% occupancy.

That provides hope, although if it follows that example, there is a long road ahead.

Wyndham Hotels & Resorts

While Wyndham Hotels & Resorts primarily franchises its properties, its management operates a very different business than either Hilton or Marriott. Its branded hotels include names like Super 8, Days Inn, Howard Johnson, La Quinta, and Ramada that are economy or mid-scale chains, with the two categories accounting for 78% of its rooms.

Most of its bookings, 70%, are from leisure travelers. The remaining portion is mostly small businesses such as truckers, contractors, and emergency crew workers, with less than 5% derived from corporate accounts.

In the fourth quarter, Wyndham's revenue fell by about 37% to $292 million. But management claimed its lower-priced economy and midscale offerings outperformed the industry's higher-end chains.

As the pandemic hopefully fades, these are likely to do well as people go on vacations, but still need to conserve cash. Although still below the year-ago level, the company showed its confidence recently, doubling the dividend to $0.16 starting this year.

Do any deserve an investment?

Hilton and Marriott are fine companies, but both are reliant on people and businesses traveling again. For my money, Wyndham's reliance on lower-priced hotels and individuals on a budget plays better to the current environment, making it the better investment.