Before I begin discussing my thoughts regarding the possible bullish case for hotel stocks, I must start with a confession: this is one of the most difficult topics in the investment sector right now. Although Americans are optimists at heart, the novel coronavirus pandemic has brought much of our unfiltered thoughts into the open. Much of that has translated into positivity, as neighbors step up to help those in need.

But in other situations — as you well know — the pandemic has fueled long simmering tensions that have exploded onto center stage. Of course, I’m referring to the protests calling for racial justice, which has sparked a countermovement among the right wing. Caught in the middle are folks who are tired of the sudden political division. Within this mix, you have those who are fed up with social distancing and mitigation measures, likely causing a rise in new coronavirus cases in the U.S.

None of this is helpful if you’re banking on hotel stocks to lift your portfolio. For me, one of the factors that bothers me is that so many names in this sector are charting bearish rising wedge patterns. A possible example of this is Hilton Hotels (NYSE:HLT). Ordinarily, I’d love to include this company into a list of hotel investments to buy. But the warning signs are enough to give me pause.

That said, there is supportive narrative for hotel stocks. First, we’re heading into the holiday season and this could possibly lead to greater travel demand. Not only is there pent-up demand from people tired of sitting at home, we are social creatures. We cannot be separated from our family and friends for too long. If anything, this crisis has demonstrated the importance of our relationships.

Second, some countries or regions just have better disciplined people than here in the U.S. For the next few months, I suspect we’ll hear about the term “social trust” more often. Those nations that have greater trust will likely see their economies bounce back from Covid-19. Therefore, I’m going to think outside the box for potential hotel stocks to buy.

• Choice Hotels (NYSE:CHH)
• Wynn Resorts (NASDAQ:WYNN)
• Hilton Grand Vacations (NYSE:HGV)
• Daiwa House (OTCMKTS:DWAHY)
• Japan Hotel REIT Investment Corp (OTCMKTS:NIPOF)
• Huazhu Group (NASDAQ:HTHT)
• Red Lion Hotels (NYSE:RLH)

And just a reminder: The travel industry isn’t completely dead. I would know because I’ve visited a few hotels during this awful period. From my experience, the hotel industry is taking safety measures very seriously. Thus, I suspect that many other travelers will feel reassured, thereby leading to word-of-mouth favorability sentiment. Keep that in mind as you go through these hotel stocks to buy.

Hotel Stocks: Choice Hotels (CHH)

I’m going to start off this list of hotel stocks with both a company and a warning. Fundamentally, I like the case surrounding Choice Hotels as a contrarian opportunity. However, technically, I’m not a big fan of its chart. CHH stock also was trending inside a rising wedge pattern. At time of writing, it has broken out of this formation, although I’m unclear as to what the breakdown signals.

Is this an early-warning indicator that CHH stock will soon collapse? Or is it currently building support for an upside move? Personally, I don’t have much confidence in hotel stocks. But if a gun were pointed at my head, I’d put Choice Hotels in my portfolio.

Why? Again, I would rely (under duress, mind you) on the fundamentals for confidence. Under its portfolio, Choice Hotels offers a wide selection, from more luxurious options to the discount brands; hence the name, Choice. And this discount play is what I would go for.

As multiple reports have pointed out, recreational vehicle sales boomed during this crisis. Broadly, this indicates that vacation demand is high. However, for those that can’t afford RVs, they’ll look for discount or high-value lodgings. In that case, CHH wins out.

Wynn Resorts (WYNN)

With a pandemic that’s still raging, I’m not a big fan of hotel stocks. And no, I’m not getting the warm and fuzzies for companies that are levered to the Las Vegas casino industry. However, as a pure speculative bet, gamblers may want to consider Wynn Resorts.

First, WYNN stock is largely associated with its premium hotels and casinos in Sin City. And that might not be a bad place to ply your trade, even with the coronavirus lingering about. I love these warm-weather cities during the holiday season –– it’s absolutely perfect! I’m sure many will feel the same way, which could lead to a tourism bump.

Also, data from the Las Vegas Convention and Visitors Authority has forwarded positive trends. In August, visitor volume registered 1.54 million. Now, that’s down 57% year-over-year. However, month-over-month, we’re talking an improvement of nearly 7%. Further, visitors have been steadily pouring in since the April and May doldrums.

Also, WYNN stock is levered to the Macau market, which is incredibly significant at the time. According to an August 2020 report from the South China Morning Post, Macau has not recorded a single Covid death. That speaks to its social trust, a factor that should be considered when analyzing hotel stocks.

Hilton Grand Vacations (HGV)

Yes, I understand that I just expressed my reservations about Hilton Hotels near the top. However, Hilton Grand Vacations was spun off from its namesake founder. Not only that, Hilton Hotels is mostly a transitory name. By that, I mean the company depends on a high volume of travelers, which encompass both personal and business purposes.

With HGV stock, however, there is a commitment involved. Because the underlying business is involved in timeshares, Hilton Grand Vacations, essentially operates as a club. Further, timeshares represent exclusivity. From a health perspective, you don’t have the comings and goings of travelers of whom you have no idea what they may be carrying.

That’s another reason why I’m hesitant on the namesake founder. With Hilton, you have high-profile real estate in the U.S. and abroad open to anybody with money. Yes, that’s the same case with the underlying properties of HGV stock. But the difference is that I can just book a Hilton Hotel room right now. It’s not so easy with timeshares.

Nevertheless, I still view this industry with skepticism, timeshares or not. But if you had to bet, go with HGV due to its significant nuance.

Daiwa House (DWAHY)

I’m going to ruffle some feathers when I say this but when it specifically comes to decency, respect for the greater good and cleanliness, I have found as a world traveler the Japanese culture to be second to none. Mostly, it comes down to the Japanese preferring physical separation whenever possible.

And this brings me to Daiwa House and DWAHY stock.

Admittedly, Daiwa House is not the purest play on hotel stocks. As a home and commercial properties builder, Daiwa has multiple business categories under its vast portfolio. However, I anticipate greater travel in Japan and neighboring Asian countries.

For one thing, the west has not learned its lessons regarding the coronavirus. In Europe, the Associated Press is reporting a worrying second wave. Back home, I continue to be surprised at the number of people believing in whatever conspiracy theories are floating around, so long as it supports their ideological agenda.

On the other hand, Japan takes the coronavirus seriously because most Japanese (72% as of Sept. 22, according to YouGov) are worried about catching Covid-19. However, only 58% of Americans on Sept. 21 expressed such concerns. That collective attitude variance could help DWAHY stock.

Japan Hotel REIT Investment Corp (NIPOF)

Japan Hotel REIT Investment Corp is quite a mouthful. However, according to its website, this company is the largest real estate investment trust (REIT) in Japan, so I guess it deserves such a lofty name. I must admit that under ordinary circumstances, I wouldn’t consider NIPOF stock. Even in this new normal, Japan Hotel REIT is a tough sell.

Look, we’re in a pandemic. While cultural differences may have allowed some countries to evade the threat more than others, the crisis isn’t over. Therefore, hotel stocks are suspect, especially those levered to far-flung regions relative to American and European travelers.

Nevertheless, NIPOF stock does have a major catalyst in the upcoming 2020 Summer Olympics. From what I understand, the year “2020” will stay but the event will occur in 2021 (hopefully). Should the Olympics take place next summer, that would represent a huge boon for Japanese hotel stocks.

However, I must be clear that although the Japanese government is making it one of its top priorities to host the games at that time, there’s no guarantee. Thus, NIPOF could end up being a very binary play. If the tournament proceeds, great. If not, watch out!

Huazhu Group (HTHT)

It goes without saying that Chinese companies are not exactly going to win in the sentiment department. After all, the facts point to China as the origination point of SARS-CoV-2. And this naturally clouds the sentiment for Huazhu Group, a specialist in discount Chinese hotels. However, the big positive for HTHT stock is that China has largely controlled its coronavirus cases.

To be sure, no country is out of the woods yet. At time of writing, CNN reported breaking news that China will test nine million people as the government detected a cluster of cases in the port city of Qingdao. Of course, I’m not naïve. That could greatly impact the nearer-term narrative for HTHT stock.

Let’s face it — President Trump is correct about one thing. The Chinese Communist Party is hardly a transparent entity. Therefore, it’s hard to trust anything that comes out of its mouth.

Nevertheless, Huazhu Group may benefit from two fundamental tailwinds. First, social trust among Chinese urban locals tends to be relatively high. This indicates that folks there are more willing to adopt mitigation efforts to control the coronavirus.

Second, the Chinese government is draconian, which isn’t helpful for individual freedoms. However, when it needs something done, it gets it done.

Red Lion Hotels (RLH)

Finally, to round off this gallery, we arrive at my most cynical play among hotel stocks, Red Lion Hotels. Fundamentally, it’s similar to Choice Hotels in that Red Lion properties cover a range of options, ranging from premium to discount lodgings. Theoretically, this gives RLH stock an ideal balance in this highly dynamic new normal.

But why I’m interested in RLH stock as a potential recovery gamble is its volatility. On a year-to-date basis, Red Lion shares are down nearly 44%, which is bad even stacked against other underperforming hotel stocks. Notably, shares are fairly close to their all-time lows.

In most circumstances, you would run away from such an “opportunity.” Usually, a disturbingly cheapened stock is cheap for a reason. In this case, it’s not entirely clear when the economy will recover. And if the new normal culture extends well beyond this year, that could spell trouble for this and other industries.

But on the other hand, just how much more can RLH fall? With other hotel stocks, it almost seems a guarantee that they have more red ink in their future. With Red Lion, it seems as if the worst is behind it.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.