Hyatt Opens Hyatt Regency Hotel In France, Eyes Unit Growth

Hyatt Hotels Corporation (NYSE:H) announced that it launched Hyatt Regency Chantilly, which marked the ninth Hyatt branded hotel in France. The 211-roomed hotel is located in close proximity to Charles De Gaulle International Airport and offers Hyatt’s signature luxury amenities.

The move is in line with the company’s efforts to strengthen its Regency brand’s image and fortify presence in Europe. Last month, Hyatt announced that its affiliate inked a franchise deal with Bay Street Holdings Limited to develop the first Hyatt-branded hotel in Malta.

Expansion of the Hyatt Regency brand in France will not only strengthen the company’s presence in Europe but will also help it counter intense competition from other hospitality chains like Marriott (NASDAQ:MAR) and Hilton (NYSE:H) .

Expansion — Major Positive

Hyatt is consistently trying to expand presence worldwide and has expansion plans for the Asia Pacific, Europe, Africa, the Middle East and Latin America. Expansion in these markets should help the company gain market share in the hospitality industry, in turn boosting business. Thus, an essential aspect of Hyatt’s riveting growth potential is its strong brand presence, and continual expansion in higher growth and under-penetrated markets.

Apart from these, the company also announced further expansion plans into diverse international markets — including Australia, Brazil, Germany, the U.K., Indonesia, Japan, Mexico, Saudi Arabia, Singapore, Thailand, Netherlands and others. Meanwhile, Hyatt’s new signings across its brands globally have consistently outpaced openings and this trend is expected to continue in 2019. In 2018, the company registered net room growth of 13.6% on a year-over-year basis. For 2019, it expects unit growth of roughly 7-7.5%, reflecting 80 new hotel openings.

Our Take

The addition of Hyatt Regency Chantilly is likely to boost Hyatt’s revenues in the EAME/SW Asia Management and Franchising segment. The segment’s revenues in the first quarter of 2019 remained flat at $18 million. Comparable EAME/SW Asia full-service hotels’ RevPAR increased 3%. ADR decreased 0.8% and occupancy rose 260 bps.

Zacks Rank & Share Price Movement

Shares of Hyatt have gained 14.7% so far this year, underperforming the industry’s 27.7% rally. Despite the underperformance, the company’s strong brand recognition, efforts to enhance guest experience and increased focus on operational excellence are likely to prove beneficial in the quarters to come. Also, it impressed investors with better-than-expected earnings for the 13 straight quarters.

Hyatt, sharing the same space with Choice Hotels (NYSE:H) , 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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