After experiencing a strong 2017, the hotel industry is likely to enjoy another successful year. A confluence of factors is working in favor of the sector at the moment. Firstly, the economy remains strong and the labor market continues to strengthen. Also, the recent jump in yearly wage growth bears evidence of the fact that the American consumer is likely to have even greater levels of disposable levels of income over the rest of the year.

According to the recently released Deloitte 2018 Travel and Hospitality Industry Outlook, the hotel industry is likely to expand by 5-6% over 2018. This is likely to result in record gross bookings of around $170 billion.

In January, a report by PricewaterhouseCoopers (PwC) indicated that a strong economy and recent tax cuts would fuel the highest rates of occupancy for the hospitality industry since 1981. According to PwC, occupancy is likely to increase to 66.1% for hotels in the United States in 2018.

With Hilton Worldwide Holdings Inc. (HLT – Free Report) and Marriott International Inc. (MAR – Free Report) both scheduled to report on Feb 14, this may be a good time to consider which of these is a better stock. Both stocks have a Zacks Rank #2 (Buy). 

Other major stocks reporting earnings on Feb 14 include Cisco Systems (CSCO – Free Report) and Applied Materials, Inc. (AMAT – Free Report) .

Price Performance

When considering price performance over the last three months, Marriott has gained 13.2%, higher than the broader industry’s 9.9% increase over the same period. On the other hand, Hilton has gained 10.8% over this period, which exceeds the broader industry’s performance but falls behind Marriott.

Current Ratio

The hospitality industry requires a large quantum of working capital. Additionally, it also needs to service a number of short-term financial obligations. This is why liquidity ratios are an essential component of the industry’s analysis.