Room at the inn for hotel stocks

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Hotel stock prices are registering highs that experts say might last well into 2015.

A January 2014 study by consultancy PricewaterhouseCoopers predicts that hotel occupancy levels will reach 63.2 percent in 2014, which would be up 0.9 percentage points from 2013. The report also anticipates growth in hotel construction.

“We’re really in the sweet spot of the lodging industry cycle, which typically lasts about 7 years,” says Bryan Maher, who is an analyst at investment banking company Craig-Hallum Capital Group. He believes that the cycle has another 1–2 years to run, barring unforeseen events. When room-supply growth exceeds the industry average for 2 years (you can find this in many free industry reports, such as PwC’s quarterly lodging outlook) and gross domestic product growth slows to below 2 percent, Maher cautions, it probably is time to sell.

His favorite is Hyatt Hotels (NYSE: H; Price: $53.09), because its properties are in good markets, and the stock is relatively inexpensive.