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Hilton (HLT) to Acquire Graduate Hotels Brand for $210 Million
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Hilton Worldwide Holdings Inc. (HLT - Free Report) signed a contract with Adventurous Journeys (AJ) Capital Partners to acquire the Graduate Hotels brand for $210 million.
This strategic transaction is subject to customary closing conditions, including review and approval, according to Hart-Scott-Rodino, and is expected to close in the second quarter of 2024.
Hilton is optimistic about the incorporation of the Graduate Hotels brand into its diversified brand portfolio as it expects this inclusion will provide travelers access to exceptional hospitality in their favorite university towns. This inclusion, along with HLT’s recently announced partnerships with Small Luxury Hotels of the World and AutoCamp, contributes to its growth trajectory and diversifies its product offerings.
Acquisition in Details
Per the agreement, Hilton will acquire all the rights of the brand worldwide, which will include entering into franchise agreements for all the signed and existing pipelines of Graduate Hotels and being responsible for the brand’s development and growth.
After the acquisition, AJ Capital Partners will remain the owner of more than 35 operating and pipeline of the brand’s properties, but their operations will be under the long-term Hilton franchise agreements.
The booking of Graduate Hotels through Hilton channels is expected to be available from later 2024, and customers directly booking through these channels will be able to access instant benefits comprising flexible payment slider, exclusive member discounts, free standard Wi-Fi and the Hilton Honors mobile app. The Graduate Hotels will also participate in Hilton Honors, Hilton’s award-winning guest loyalty program.
Hilton on Expansion Spree
Hilton intently focuses on expanding its market reach and diversifying its product offerings through new unit growth, innovation initiatives and strategic partnerships. Its broad geographic diversity lowers the effect of volatility in individual markets, with more than half of the company’s pipeline located outside the United States.
Considering the unit growth strategy, in 2023, HLT opened 395 new hotels, with room additions totaling nearly 63,000, marking an 8.6% year-over-year increase. The company achieved net unit growth of 4.9% compared with 4.7% a year ago. Despite robust openings, HLT's pipeline reached the highest level in its history, driven by record signings of 130,000 rooms in 2023.
As of Dec 31, 2023, Hilton's development pipeline comprised nearly 3,274 hotels, with almost 462,400 rooms across 118 countries and territories. For 2024, the company expects net unit growth between 5.5% and 6%.
Image Source: Zacks Investment Research
Shares of this hospitality company have soared 34.9% in the past six months, outperforming the Zacks Hotels and Motels industry’s 24.5% growth.
It has a trailing four-quarter earnings surprise of 17.8%, on average. The stock has gained 46.5% in the past six months. The Zacks Consensus Estimate for H’s 2024 sales and earnings per share (EPS) indicates an increase of 2.9% and 30.1%, respectively, from the year-ago levels.
Netflix, Inc. (NFLX - Free Report) presently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 5.4%, on average. The stock has surged 55.5% in the past six months.
The Zacks Consensus Estimate for NFLX’s 2024 sales and EPS implies growth of 14.5% and 41.4%, respectively, from the year-ago levels.
Adtalem Global Education Inc. (ATGE - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 16.9%, on average. The stock has rallied 13.9% in the past six months.
The Zacks Consensus Estimate for ATGE’s fiscal 2024 sales and EPS implies growth of 6.4% and 10.2%, respectively, from the year-ago levels.
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Hilton (HLT) to Acquire Graduate Hotels Brand for $210 Million
Hilton Worldwide Holdings Inc. (HLT - Free Report) signed a contract with Adventurous Journeys (AJ) Capital Partners to acquire the Graduate Hotels brand for $210 million.
This strategic transaction is subject to customary closing conditions, including review and approval, according to Hart-Scott-Rodino, and is expected to close in the second quarter of 2024.
Hilton is optimistic about the incorporation of the Graduate Hotels brand into its diversified brand portfolio as it expects this inclusion will provide travelers access to exceptional hospitality in their favorite university towns. This inclusion, along with HLT’s recently announced partnerships with Small Luxury Hotels of the World and AutoCamp, contributes to its growth trajectory and diversifies its product offerings.
Acquisition in Details
Per the agreement, Hilton will acquire all the rights of the brand worldwide, which will include entering into franchise agreements for all the signed and existing pipelines of Graduate Hotels and being responsible for the brand’s development and growth.
After the acquisition, AJ Capital Partners will remain the owner of more than 35 operating and pipeline of the brand’s properties, but their operations will be under the long-term Hilton franchise agreements.
The booking of Graduate Hotels through Hilton channels is expected to be available from later 2024, and customers directly booking through these channels will be able to access instant benefits comprising flexible payment slider, exclusive member discounts, free standard Wi-Fi and the Hilton Honors mobile app. The Graduate Hotels will also participate in Hilton Honors, Hilton’s award-winning guest loyalty program.
Hilton on Expansion Spree
Hilton intently focuses on expanding its market reach and diversifying its product offerings through new unit growth, innovation initiatives and strategic partnerships. Its broad geographic diversity lowers the effect of volatility in individual markets, with more than half of the company’s pipeline located outside the United States.
Considering the unit growth strategy, in 2023, HLT opened 395 new hotels, with room additions totaling nearly 63,000, marking an 8.6% year-over-year increase. The company achieved net unit growth of 4.9% compared with 4.7% a year ago. Despite robust openings, HLT's pipeline reached the highest level in its history, driven by record signings of 130,000 rooms in 2023.
As of Dec 31, 2023, Hilton's development pipeline comprised nearly 3,274 hotels, with almost 462,400 rooms across 118 countries and territories. For 2024, the company expects net unit growth between 5.5% and 6%.
Image Source: Zacks Investment Research
Shares of this hospitality company have soared 34.9% in the past six months, outperforming the Zacks Hotels and Motels industry’s 24.5% growth.
Zacks Rank & Key Picks
Hilton currently carries a Zacks Rank #3 (Hold).
Here are some better-ranked stocks from the Zacks Consumer Discretionary sector.
Hyatt Hotels Corporation (H - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
It has a trailing four-quarter earnings surprise of 17.8%, on average. The stock has gained 46.5% in the past six months. The Zacks Consensus Estimate for H’s 2024 sales and earnings per share (EPS) indicates an increase of 2.9% and 30.1%, respectively, from the year-ago levels.
Netflix, Inc. (NFLX - Free Report) presently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 5.4%, on average. The stock has surged 55.5% in the past six months.
The Zacks Consensus Estimate for NFLX’s 2024 sales and EPS implies growth of 14.5% and 41.4%, respectively, from the year-ago levels.
Adtalem Global Education Inc. (ATGE - Free Report) currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 16.9%, on average. The stock has rallied 13.9% in the past six months.
The Zacks Consensus Estimate for ATGE’s fiscal 2024 sales and EPS implies growth of 6.4% and 10.2%, respectively, from the year-ago levels.