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Why I think the Mantra Group Ltd share price can keep climbing higher

The Mantra Group Ltd (ASX: MTR) share price has been one of the better performers over the last three months, rising approximately 7% despite a 3% drop on Friday.

The good news is that I believe there are more gains ahead for shareholders, making the leading accommodation provider one of my favourite investment options on the share market right now.

Why should you invest?

One key trend which goes in the company’s favour is the inbound tourism boom that Australia is experiencing.

The most recent data from the Australian Bureau of Statistics reveals that Australia welcomed a massive 727,600 short-term arrivals during April.

This was a 7.7% increase on the prior corresponding period and in my opinion demonstrates why company’s like Mantra, Event Hospitality and Entertainment Ltd (ASX: EVT), and Crown Resorts Ltd (ASX: CWN) could profit greatly over the next few years.

Whilst all three are likely to be good investments given this tailwind, my preference remains Mantra due to it being a pure-play accommodation provider.

My concern with the other two is that weak box office figures could have an impact on Event’s results or a drop in VIP play at Crown’s casinos could have a negative impact on its performance.

Another thing I like in particular about Mantra is that its numerous brands cater to travellers on almost every budget, rather than Crown’s position as a luxury accommodation provider. I believe this is a great way to capture the tourism boom to its fullest.

All in all, I expect this to result in strong demand for rooms over the coming years. As demand increases, I believe the company will enjoy higher occupancy levels and average room rates, ultimately boosting its bottom line growth and ability to increase its dividend.

Which right now provides investors with a trailing fully franked 3.4% yield. Whilst it isn’t the biggest yield on the market, I feel it has significant room to grow over the next decade.

For this reason I think Mantra would be a great buy and hold investment.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Crown Resorts Limited and Event Hospitality & Entertainment. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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