Wildfires in Maui may hit Hawaii’s tourism industry hard. Some stocks to watch.
An aerial view shows destroyed homes and buildings that have burned to the ground in West Maui.
Patrick T Fallon/AFP/Getty Images
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Unprecedented wildfires in Maui have already claimed at least one already 55 lives And Continue burning all over the island. they already have Destroyed Popular tourist spots like Lahaina, and experts predict it will take years Rebuilding The historic city was after more than a thousand buildings destroyed.
It will take time to assess the full extent of the human and environmental toll of the disaster, but it appears likely that there will be disruption to tourism, which explains The majority of from Maui’s economy. The Hawaii State Government currently allows only essential travel to Maui. Of course, the fires could put off anxious travelers until after restrictions are lifted, to that island and the country as a whole.
Ari Klein, an analyst with BMO Capital Markets, notes that the financial impact of the disaster won’t be known for some time, but he takes a look at Hawaii Real Estate Investment Companies, or REITs.
Host hotels and resorts
(Stock ticker: HST) It has four hotels in the state, and three on Maui. Hawaii is the company’s largest single market, accounting for 11% of 2022 earnings before interest, tax, depreciation, and amortization, or Ebitda — or $170.5 million, and Maui makes up more than 90% of that number.
Klein notes that the Hyatt Regency, which gave away $82.7 million in Ebitda last year — the second highest in Host’s portfolio, is in the hardest-hit city of Lahaina. The hotel’s website says it is closed to new guests through August 17, and that it has “implemented emergency preparedness measures in an effort to ensure the safety and security of our guests and colleagues.”
Among the Host’s other Maui properties, Klein writes, the Fairmont Kea Lani and Andaz Maui at Wailea Resort (which brought in $39 million and $36.5 million in Ebitda last year, respectively) are still open, “but due to visitor restrictions Maui and airlines cancel At a minimum, expect turbulence in the near term.”
Host Hotels & Resorts fell 2.2% to $16.29 on Friday. The broader market was also lower on Friday
Standard & Poor’s 500
And
NASDAQ Composite
Both close below 1%. Klein maintains its outperform rating and $21 price target on the stock.
Park Hotels and Resorts
(PK) gets more than a quarter of Ebitda from Hawaii, but has no exposure to Maui. However, the village of Hilton Waikoloa, which provided $54 million in Ebitda in 2022, is located on the Big Island, which also deals with wildfires. However, these fires are “less severe than in Maui and PK has noted that they have yet to experience any impact or cancellation,” he writes.
It maintained a market perform rating and price target of $15 on Park Hotels shares, which fell 2.7% to $13.04 on Friday.
Sunstone hotel investors
(SHO) owns Maui’s Wailea Beach Resort; Klein doesn’t cover the company, but he notes that ownership was responsible for $66 million from Ebitda last year — or 18% of the company’s total. Shares fell 1.8% to $9.09.
Some other Hawaii-related stocks fell ahead of the broader market on Friday:
Hawaii Holding
(HA), owner of Hawaiian Airlines, and
Maui land and pineapple
(MLP) shares fell more than 3%.
Hawaii Electric Industries
(HE), which owns utility company Maui Electric, has been roughly flat but is down about 12% this week.
Ultimately, the total cost and impact of wildfires will not be known for some time. The biggest question for the island’s businesses – and the broader economy – will be how long tourists will stay away.
Write to Teresa Rivas at teresa.rivas@barrons.com
