NEW YORK (Money Magazine) - Is there any room left in hotel stocks? Gains of 30 percent to 50 percent by big three hoteliers Starwood, Hilton and Marriott have helped power the group.

But while the best-known hotel stocks are sporting five-star prices and rich price/earnings ratios, investors who look beyond the industry's most familiar names can still find profitable ways to check into a lodging rebound.

First, a little background on why hotel stocks are so popular today. Confidence is growing that the worst is over for hotels.

A long-awaited recovery in business travel appears to be unfolding, thanks to an improving economy and fading fears about war, terrorism and SARS. Conference and convention activity is increasing, and hotel occupancy and room rates are trending upward after two years of back-to-back declines.

Revenue per available room is expected to grow 0.2 percent this year and 4.9 percent next year, after dropping 2.4 percent in 2002 and 6.6 percent in 2001, according to PricewaterhouseCoopers.

"Travel will recover -- that's a safe bet -- but the question is how quickly and how strongly," says Bjorn Hanson, director of PWC's hospitality industry group.

One big positive for the industry is that with hotel companies so lean today, the benefits of an economic recovery should show up faster than in the past.

The occupancy level needed to break even now is just 47 percent vs. the 60 percent average of the past 30 years, notes Hanson. And the companies have held up relatively well in the face of pricing pressure from Internet booking sites, which sell hotel rooms at bulk rates.

Though profits are down from $22 billion in 2000, the industry posted profits of some $16 billion in each of the last two years, thanks to cost cutting and a cap on building.

Some well-known names on Wall Street are betting on a bounce back.

Goldman Sachs strategist Abby Joseph Cohen added hotel stocks to her model portfolio in May, betting that they would be a key beneficiary in an economic recovery.

Goldman Sachs hotel analyst Steven Kent raised his third-quarter earnings estimates in early September on four of the lodging stocks he covers, and says his firm's earnings outlook may still be too conservative.

Nevertheless, with the most familiar names in the industry trading at P/Es of 37 to 50 times the next four quarters' earnings, investors need to shop around a bit. Here are three promising plays in the hotel sector.

Investors can find good values among mid-price hotels that attract cost-conscious corporate and leisure travelers. In that vein, we like Cendant (CD (CD: Research, Estimates)), the world's largest franchiser of hotels; among its brands are Days Inn, Ramada and Super 8.

As a franchiser rather than an owner of hotels, it's got low fixed costs and strong free cash flow of $2 billion a year. About two-thirds of Cendant's revenue comes from travel -- not only hotels, but also Avis and Budget rental cars, Cheaptickets.com and Galileo, the computer reservation system used by travel agents.

At $20.50 a share, with a P/E of 12.9 based on estimated 2004 earnings, "it's cheap and there are a lot of ways the company can benefit from the recovery in travel," says Brace Brooks, equity analyst at T. Rowe Price, which owns Cendant in its Growth fund and Blue Chip Growth fund.

The owner of 281 La Quinta Inns and 75 La Quinta franchises in 33 states, La Quinta (LQI (LQI: Research, Estimates)) is completing a turnaround it began before Sept. 11. It has cut debt from $2.6 billion to $665 million, brought in new management, including senior people from Marriott, and sold all its non-lodging-related assets.

La Quinta is expected to return to profitability next year, and its shares are trading at a big discount to the net asset value of its real estate properties.

"There's tremendous upside potential and value," says Standard & Poor's equity analyst Ray Mathis; he has a 12-month target of $9 a share, 50 percent above the current $6.48 price.

Hospitality Property Trust (HPT (HPT: Research, Estimates)) buys hotels and leases the buildings to operators such as Marriott International. The real estate investment trust boasts investments of some $3 billion in 274 hotels across 38 states.

Lodging REITs haven't run up as much as the hotel companies that manage their properties. Plus this REIT has superior management, a strong balance sheet and a solid 8 percent dividend yield.