Hilton Expands In China With Huizhou Longmen Resort Launch

Hilton Worldwide Holdings Inc. (NYSE:HLT) recently announced the opening of Hilton Huizhou Longmen Resort, the first Hilton property in China with natural hot springs.

Developed by Guangzhou R&F Properties Co., Ltd and maintained by Hilton, the property is located in Yonghan Town of Longmen County and has easy access to the Guangzhou or Baiyun International Airport. Notably, the 366-guest roomed hotel marks a significant expansion of Hilton's resort footprint in Southern China.

We note that the stock has rallied 30.3% in the last six months, significantly outperforming the industry’s gain of 28.2% and S&P 500’s growth of 10.3%.

Strategic Expansion in China

The opening of Huizhou Longmen Resort is in line with Hilton’s expansion policy. It is expected to boost the company’s brand portfolio, which comprises 14 world-class brands with more than 5,100 properties. The hotels and resorts, situated in about 103 countries and territories, have nearly 838,000 rooms.

Hilton has a geographic diversity which lowers the effect of volatility in individual markets. Thus, the company is capable of capitalizing on the strong demand in China and is optimistic about driving net unit growth in the country.

Per a recent report by Euromonitor International, China is the largest tourism source market in terms of spending. Largely because of the increase in GDP per capita and the rise of middle-class households, tourism expenditure is expected to rise 10.9% in the 2017-2022 period. Evidently, in a bid to cash in on the China market, Hilton is eyeing the Asia-Pacific region as well and is expected to deliver solid Revenue Per Available Room (RevPAR) growth in the global market.

Focus on Enhancing Customer Loyalty

The new hotel seems to be part of Hilton’s strategy to enhance customer loyalty, primarily because it is under Hilton Honors — one of the largest loyalty programs. With about 70 million members, this network has emerged as a valuable asset for the company. In fact, about 57% of all occupancy per night takes place through this membership program. The company is focused on making multiple enhancements to its loyalty program in order to make it more customer-centric, driving incremental value for guests and the overall system.

To Conclude

Relentless expansion and efforts to fortify global presence make Hilton a major hotelier, which is continuously gaining momentum and is set to become the world's largest hospitality company.

Additionally, Hilton has strong fundamentals and cash flow position, which are beneficial for shareholders. In order to return more to shareholders, the company has opted for a more capital-light operating business model backed by the spin-off of a portfolio of hotels and resorts as well as its timeshare business.

Zacks Rank & Other Stocks to Consider

Hilton carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Consumer Discretionary sector are InterContinental Hotels Group PLC (NYSE:IHG) , Choice Hotels International, Inc. (NYSE:CHH) and Clarus Corporation (NASDAQ:CLAR) . While Clarus sports a Zacks Rank #1 (Strong Buy), Choice Hotels and InterContinental carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clarus, Choice Hotels and InterContinental’s earnings in 2018 are expected to improve 254.3%, 12% and 12.9%, respectively.

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