Hyatt Hotels Corporation (H Quick QuoteH - Free Report) is benefiting from robust revenue recovery in China, high leisure and business demand, and expansion efforts. The stock has gained 13.3% in the past six months compared with the industry’s growth of 7.9%.

Our model predicts H’s revenues and earnings in second-quarter 2023 to witness growth of 6.5% and 49.2% year over year, respectively.

Let’s delve deeper to find out whether the stock is worthy enough to retain.

Growth Catalysts

The company is benefiting from an increase in leisure transient demand. During the first quarter of 2023, leisure transient revenues grew 20% year over year and 24% above 2019 levels on a comparable system-wide basis. Management is optimistic that demand will remain robust for the remainder of 2023.

During first-quarter 2023, H witnessed a rise in group bookings in the Asia Pacific region, up 3% from first-quarter 2019 levels. The company stated that system-wide group revenues recovered above 2019 levels.

Hyatt is also gaining from improving revenue per available room (RevPAR). During the first quarter of 2023, system-wide comparable RevPAR increased 43% year over year owing to an increase in occupancy and average daily rate. Also, RevPAR was up 6% from 2019 levels. The upside was primarily backed by strong leisure transient trends and improving business activity.

Hyatt witnessed solid RevPAR gains in Europe, China, the Americas and the Caribbean markets region due to strong leisure demand. It anticipates system-wide 2023 RevPAR to increase 12-16% from the 2022 levels.
 

Image Source: Zacks Investment Research

On the other hand, H continues to expand its presence to drive growth. During the first quarter of 2023, 28 new hotels (or 5,128 rooms) joined Hyatt’s system. As of Mar 31, 2023, Hyatt had a pipeline of executed management or franchise contracts of approximately 580 hotels (or 117,000 rooms).

Meanwhile, the company has been focusing on its loyalty program for enhanced guest engagement. The reward program offers access to millions of urban renters, thereby facilitating them with global points through rents. Given the best-in-class loyalty program and digital platform, Hyatt’s portfolio of brands is resonating well. H stated that revenues from co-brand credit cards improved significantly from 2019 levels.

Concerns

The hotel industry is highly competitive as major hospitality chains with well-established and recognized brands are continuously expanding their global presence. Hyatt is continuously facing intense competition from both large hotel chains and smaller independent local hospitality providers.

Zacks Rank

Hyatt currently carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:

Trip.com Group Limited (TCOM Quick QuoteTCOM - Free Report) flaunts a Zacks Rank #1 (Strong Buy). TCOM has a trailing four-quarter earnings surprise of 147.9%, on average. Shares of TCOM have increased 41.1% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Trip.com Group’s 2023 sales and EPS suggests increases of 101.6% and 531%, respectively, from the year-ago period’s levels.

OneSpaWorld Holdings Limited (OSW Quick QuoteOSW - Free Report) carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 65.8%, on average. Shares of OSW have surged 67.9% in the past year.  

The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates rises of 33.9% and 89.3%, respectively, from the year-ago period’s levels.

Bluegreen Vacations Holding Corporation carries a Zacks Rank #2. BVH has a trailing four-quarter earnings surprise of 24.7%, on average. Shares of BVH have improved 53.2% in the past year.

The Zacks Consensus Estimate for BVH’s 2023 sales and EPS implies gains of 3.6% and 17.6%, respectively, from the year-ago period’s levels.