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Here's Why You Should Retain Hyatt (H) Stock in Your Portfolio
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Hyatt Hotels Corporation (H - Free Report) is likely to benefit from solid leisure transient demand, integration of Apple Leisure Group and expansion efforts. Also, sequential improvements in group travel and business transient demand bode well. However, supply chain challenges and inflationary pressure are headwinds.
Let us delve into the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Shares of Hyatt have gained 25.3% in the past six months compared with the industry’s 10.5% growth. The upside can be attributed to a rise in leisure transient demand, easing of travel restrictions and ramped-up airline capacity. During the third quarter of 2022, leisure transient revenues reached 20% above 2019 levels on a comparable system-wide basis. Given the continued strength of leisure travel demand, favorable pricing environment and airlift activities, the company is optimistic about continued growth in demand through the first quarter of 2023.
Image Source: Zacks Investment Research
Sequential improvements in group travel and business transient demand have been aiding the company’s performance. The company stated that system-wide group room revenues, which were down 7% (from 2019 levels) in June 2022, improved to being down 3% (from 2019 levels) in October 2022. During the third quarter of 2022, the company witnessed a rise in group bookings at its Americas full-service managed hotels on a year-over-year basis.
As people return to office, travel restrictions have been eased and more cross-border travel resumes, the company is optimistic about the recovery of business transient and its continued momentum over the remainder of the year. This and strength in short-term bookings coupled with strong food and beverage spending are likely to support the recovery process in the upcoming periods.
The company continues to expand its presence to drive growth. During the third quarter of 2022, 22 new hotels (or 4,243 rooms) joined Hyatt's system. As of Sep 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 114,000 rooms). Recently, the company announced its plan to expand the Independent Collection brands’ footprint by 2025. By 2025, the company’s Independent Collection brands will have 11 new hotels in their portfolio.
Increased focus on the integration of Apple Leisure Group bodes well. During the third quarter, the company reported solid segmental performance owing to strength in net package RevPAR, increased membership contracts for ALG’s Unlimited Vacation Club (approximately 9,200), guest departures (approximately 682,000) and strong unit pricing.
During the quarter, total net package revenues were up 91% from 2019 levels. The upside was backed by significant net room growth, courtesy of ALG’s expansion in Europe and organic growth in the Americas. Also, solid demand for leisure destinations, increased airlift capacity and a favorable pricing environment added to the positives.
Given distribution capabilities with an end-to-end booking process and strong operational execution, an integrated experience (with AMR and UVC program) and destination management services, the company is optimistic about ALG’s performance in 2023.
Concerns
The Hotel and Motels industry is grappling with the coronavirus pandemic and Hyatt isn’t immune to the trend. During the third quarter of 2022, the company reported reduced demand in Greater China owing to the crisis. Although the company commenced its recovery process, we believe that the emergence of the new COVID-19 variant is likely to create volatility in demand. It also remains cautious of supply chain challenges and increases in costs (due to inflation).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Reservoir Media, Inc. (RSVR - Free Report) .
World Wrestling Entertainment currently sports a Zacks Rank #1. WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 43.7% in the past year.
The Zacks Consensus Estimate for WWE’s current financial year sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
Royal Caribbean currently sports a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of negative 1.8%, on average. Shares of RCL have declined 32.5% in the past year.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 43.6% and 138.3%, respectively, from the year-ago levels.
Reservoir currently sports a Zacks Rank #1. RSVR has a long-term earnings growth rate of 17.5%. Shares of RSVR have declined 20.4% in the past year.
The Zacks Consensus Estimate for RSVR’s 2023 sales and EPS indicates a rise of 11.6% and 80%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Hyatt (H) Stock in Your Portfolio
Hyatt Hotels Corporation (H - Free Report) is likely to benefit from solid leisure transient demand, integration of Apple Leisure Group and expansion efforts. Also, sequential improvements in group travel and business transient demand bode well. However, supply chain challenges and inflationary pressure are headwinds.
Let us delve into the factors that highlight why investors should retain the stock for the time being.
Growth Catalysts
Shares of Hyatt have gained 25.3% in the past six months compared with the industry’s 10.5% growth. The upside can be attributed to a rise in leisure transient demand, easing of travel restrictions and ramped-up airline capacity. During the third quarter of 2022, leisure transient revenues reached 20% above 2019 levels on a comparable system-wide basis. Given the continued strength of leisure travel demand, favorable pricing environment and airlift activities, the company is optimistic about continued growth in demand through the first quarter of 2023.
Image Source: Zacks Investment Research
Sequential improvements in group travel and business transient demand have been aiding the company’s performance. The company stated that system-wide group room revenues, which were down 7% (from 2019 levels) in June 2022, improved to being down 3% (from 2019 levels) in October 2022. During the third quarter of 2022, the company witnessed a rise in group bookings at its Americas full-service managed hotels on a year-over-year basis.
As people return to office, travel restrictions have been eased and more cross-border travel resumes, the company is optimistic about the recovery of business transient and its continued momentum over the remainder of the year. This and strength in short-term bookings coupled with strong food and beverage spending are likely to support the recovery process in the upcoming periods.
The company continues to expand its presence to drive growth. During the third quarter of 2022, 22 new hotels (or 4,243 rooms) joined Hyatt's system. As of Sep 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 114,000 rooms). Recently, the company announced its plan to expand the Independent Collection brands’ footprint by 2025. By 2025, the company’s Independent Collection brands will have 11 new hotels in their portfolio.
Increased focus on the integration of Apple Leisure Group bodes well. During the third quarter, the company reported solid segmental performance owing to strength in net package RevPAR, increased membership contracts for ALG’s Unlimited Vacation Club (approximately 9,200), guest departures (approximately 682,000) and strong unit pricing.
During the quarter, total net package revenues were up 91% from 2019 levels. The upside was backed by significant net room growth, courtesy of ALG’s expansion in Europe and organic growth in the Americas. Also, solid demand for leisure destinations, increased airlift capacity and a favorable pricing environment added to the positives.
Given distribution capabilities with an end-to-end booking process and strong operational execution, an integrated experience (with AMR and UVC program) and destination management services, the company is optimistic about ALG’s performance in 2023.
Concerns
The Hotel and Motels industry is grappling with the coronavirus pandemic and Hyatt isn’t immune to the trend. During the third quarter of 2022, the company reported reduced demand in Greater China owing to the crisis. Although the company commenced its recovery process, we believe that the emergence of the new COVID-19 variant is likely to create volatility in demand. It also remains cautious of supply chain challenges and increases in costs (due to inflation).
Zacks Rank & Key Picks
Hyatt currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are World Wrestling Entertainment, Inc. , Royal Caribbean Cruises Ltd. (RCL - Free Report) and Reservoir Media, Inc. (RSVR - Free Report) .
World Wrestling Entertainment currently sports a Zacks Rank #1. WWE has a trailing four-quarter earnings surprise of 25.2%, on average. The stock has increased 43.7% in the past year.
The Zacks Consensus Estimate for WWE’s current financial year sales and earnings per share (EPS) indicates a rise of 4.9% and 10.7%, respectively, from the year-ago period’s estimated levels.
Royal Caribbean currently sports a Zacks Rank #1. RCL has a trailing four-quarter earnings surprise of negative 1.8%, on average. Shares of RCL have declined 32.5% in the past year.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 43.6% and 138.3%, respectively, from the year-ago levels.
Reservoir currently sports a Zacks Rank #1. RSVR has a long-term earnings growth rate of 17.5%. Shares of RSVR have declined 20.4% in the past year.
The Zacks Consensus Estimate for RSVR’s 2023 sales and EPS indicates a rise of 11.6% and 80%, respectively, from the year-ago period’s levels.