Xenia Projected as Top Performer in 2023

The DJIA fell another 163 points, Nasdaq was down 159, the S&P 500 was down 35 and the 10-year treasury yield went back up quick, up .10 to 3.58%. Lodging stocks were down, nearly across the board. ABNB, SLNA and VCSA all traded down to new 52-week lows. AINC was down -9% on the day and SOND fell -7%.

Baird picked the hotel real-estate investment trust Xenia Hotels & Resorts as their Best Idea for 2023. They see attractive risk-adjusted return potential, especially on a relative basis versus Hotel REIT peers given the recent pullback and reset in earnings expectations. While XHR had acute expense pressures in 3Q, Baird sees growing expense headwinds for the entire sector in 2023 but much less so now for XHR. As such, the earnings reset creates an attractive entry point for new money, especially relatively, as de-risks near term estimates and modeling assumptions. They also like its balance sheet with no debt maturities until 3Q24, 80% fixed rate debt exposure and ample liquidity on hand. Baird’s target price is $18.

The Wall Street Journal published a very positive article on Hilton, including an interview with CEO Chris Nassetta. The summary is that Nassetta said their hotels are busy around the world as consumers return to in-person experiences, travel restrictions ease and many fulfill a pent-up desire to see new places. He also feels Covid-19 likely c