Over the weekend I found this article and wanted to share it with you and point out a few areas of focus. In a nutshell, what we’ve recently seen in the housing sector is happening in the hotel sector–owners upside down in their mortgages. It’s never a good thing to see a company or business go into foreclosure as it signals a slow in the consumer cycle. As consumers we account for 75% of the economic activity and if business are closing left and right, that’s one less place contributing to the flow of money in the consumer cycle.
Yes, business can close because of many reasons (such as bad management, overcrowded sector, poor planning, etc.) but when a whole sector or industry is seeing a slowdown to the point that only a few are surviving opportunities can arise. I’m not suggesting that we go short the hotels sector perse, but with a technical eye one could begin to form an opinion about the sector. As an example, the article points out that back in the mid 90s a similar event occurred in the sector. Take the time to look to the left of the chart and see what happened back then as the overall market was in a bull run.
Some of the names in the hotel sector are below:[[rlh]] [[chh]] [[ihg]] [[wyn]] [[mar]] [[hot]] [[oeh]] [[svlf]] [[hmin]] [[lgn]]
There are other names, but for the most part we are dealing with a few select names as some do not have enough liquidity that you can get in and out near the price you desire. Here is a nice comparison of the sector and the one thing that stands out is that [[chh]] really rose in the last 4 years and as such has also lost the most.