We recently published a list of the 12 Best Hotel Stocks To Buy According to Analysts. In this article, we are going to take a look at where Melco Resorts & Entertainment Limited (NASDAQ:MLCO) stands against other best hotel stocks to buy according to analysts.
Overview of the Hospitality Industry
The hospitality industry is undergoing a significant transformation after the post-Covid travel rebound. According to a report by Zion Market Research, the global hotel market is valued at $1.37 trillion as of 2023. It is expected to reach $2.99 trillion by 2032, growing at a compound annual growth rate of 9.14% between 2024 and 2032. This growth is attributed to the surging travel demand post-Covid, resurgence in leisure and business activities, and increased disposable incomes.
Released in January 2025, the “State of the Hospitality Market Report 2024” provides a deeper view of the global hospitality industry. The report showed a significant rise from $3.44 trillion in 2023 to $3.98 trillion in 2024, translating to a compound annual growth rate of 15.5%. This notable growth highlights positive trends across transportation and infrastructure improvements, the increasing influence of international hotel chains, and the growing popularity of experiential travel. In addition, the rising economic influence of the middle class in emerging markets and ballooning demand for unique experiences is further boosting this expansion. According to the report, North America is the most significant force in the hospitality market as of 2023. However, the Asia-Pacific region is anticipated to grow fastest in the coming years.
The US hospitality industry reflects similar trends. According to a report by Mordor Intelligence, the industry is estimated to have a market size of around $247.45 billion as of 2025. It is anticipated to grow at a compound annual growth rate of 4.87% between 2025 and 2030, reaching $313.87 billion by the end of the forecast period.
Increased Optimism Among US Hotel Investors
A survey regarding US hotel investors’ sentiment conducted by the CBRE Group and released on January 28 showed increased positive optimism among hotel investors. Around 94% of those surveyed expressed intentions to maintain or increase their hotel investments in 2025, a rise from 85% last year. The most prominent reason behind this growth was an optimistic outlook for total returns and distressed investment opportunities. The central business districts (CBDs) and resorts were the most commonly favored location types for 2025 among investors. The most popular chain scales were the higher-priced options.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 30 hotel stocks. We checked their upside potential, according to analysts, and then selected the top 12 most popular stocks among elite hedge funds as of Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of analysts’ average upside potential. Please note that the analyst upside potential data is as of February 12, 2025.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A bustling casino table surrounded by players, highlighting the gaming entertainment offered by the resort.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO)
Analyst Upside Potential: 68.19%
Number of Hedge Fund Holders: 25
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) develops and operates resort facilities, hotels, and casinos in the Philippines and Macau. The company’s three Macau casinos include City of Dreams, Studio City, and Altira Macau.
It reported group-wide adjusted property EBITDA of around $323 million for fiscal Q3 2024, reflecting a 7% increase compared to fiscal Q2. Its total operating revenues also grew around 16% to $1.18 billion in fiscal Q3 2024. The increase in total operating revenues was attributed to the company’s improved performance in all non-gaming operations and gaming segments, supported by a continual recovery in inbound tourism to Macau during the quarter.
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) has launched various initiatives to activate areas throughout its properties, such as a revamped loyalty program, a new Signature Club premium slot area at City of Dreams, and a highly themed slot area called the Dragon Zone at Studio City, developed in partnership with Aristocrat Gaming. Melco Resorts & Entertainment Limited (NASDAQ:MLCO) has plans to continue unveiling exciting projects to support the ongoing growth in Macau.
Overall, MLCO ranks 1st on our list of best hotel stocks to buy according to analysts. While we acknowledge the potential of MLCO, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MLCO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
