Hyatt Hotels Corporation (NYSE:H) announced plans of opening 21 luxury hotels and resorts in the Asia-Pacific region by the end of 2020. It plans to carry out these expansions through seven Park Hyatt branded properties, six Grand Hyatt and six Andaz brands, and two Alila branded resorts. The planned expansion will boost Hyatt’s Asia-Pacific luxury portfolio by more than 25%.
The move not only underscores the company’s relentless focus on expansion but is also the hotelier’s way of countering growing competition from the likes of Marriott (NASDAQ:MAR) , Hilton (NYSE:H) and smaller hotel chains, including Choice Hotels (NYSE:H) .
Backed by strong brand presence, shares of Hyatt have gained 2.3% over the past three months, outperforming the industry’s 0.4% rally.
Expansion — Major Growth Driver
The company aims to differentiate its brands from one another by providing distinct travel experiences. It is also consistently trying to expand presence worldwide and has expansion plans in the Asia Pacific, Europe, Africa, the Middle East and Latin America.
Meanwhile, Hyatt’s new signings across its brands globally consistently outpaced openings. This trend is expected to continue in 2019. The company registered net room growth of 13.6% in 2018 on a year-over-year basis. For 2019, it expects unit growth of roughly 7-7.5%, reflecting 80 hotel openings.
Our Take
The lodging industry is gaining from higher consumer disposable income, strong economy and low unemployment. Also, increased average daily rate (ADR) has been driving revenue per available room (RevPAR). Hyatt is trying to cash in on this opportunity through continual expansion.
Expansion in the Asia Pacific is in line with the company’s efforts to expand and strengthen its brand name. It plans on capitalizing the growing tourist population in the Asia Pacific region. There is a large and growing middle-class population in these markets along with a significant number of local business travelers. This is likely to support the company’s growth in these markets.
Also, we believe that these recent hotel additions will fortify the Hyatt brand’s global footprint and provide a boost to Hyatt’s Owned and Leased Hotels’ revenues. As it is, in the first quarter of 2019, revenues at Owned and Leased Hotels totaled $458 million, down 9.6% from the year-ago figure.
Hyatt currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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