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Hyatt (H) Reveals Large-Scale Expansion Plans in Pakistan

WYN MAR H HTHT

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Leading global hospitality company, Hyatt Hotels Corporation (H - Free Report) recently announced its plans of constructing four new hotels in Pakistan. These hotels will be under the ownership of Bahria Town, one of Asia’s largest private developers.

The agreement to develop the hotels will lead to the opening of the first Grand Hyatt and Hyatt regency hotels in Pakistan. Subsequent to last year’s announcement for the China-Pakistan Economic Corridor, Hyatt’s management is optimistic about the growth of Hyatt’s brands in Pakistan.

Among the four new hotels in Pakistan, the Grand Hyatt Islamabad and the Hyatt Regency Karachi are slated to open in 2023, while the Hyatt Regency Lahore and the Hyatt Regency Rawalpindi are expected to open in 2021 and 2022, respectively. The hotels are expected to add over 750 rooms to the country’s existing hotel accommodation offering. Moreover, the Islamabad hotel is slated to be the first internationally-branded golf resort in Pakistan with a state-of-the-art golf club house.

The new additions reinforce Hyatt’s vigorous expansion strategy across the rapidly growing Middle East and South-West Asia region. Growth in this region is expected to bode well for the company as the segment accounts for approximately 25% of the company’s executed contract rooms base. Moreover, as of Dec 31, 2015, the Company had approximately 60 Hyatt-branded hotels in its development pipeline in this region.

However, the company could face tough competition from other hoteliers like Marriott International, Inc. (MAR - Free Report) and Wyndham Worldwide Corporation (WYN - Free Report) who are also looking to expand into these untapped markets.

HYATT HOTELS CP Price

Recently, Hyatt posted its third-quarter 2016 numbers wherein the bottom line surpassed the Zacks Consensus Estimate by nearly 68%, while the top line marginally missed the same. The company’s results reflected growth in RevPAR (revenue per available room), increased market share and margins as well as new hotel openings.

Meanwhile, Hyatt is well poised to grow in the near and long term, given its significant international exposure, strong development pipeline and the newly announced loyalty program, among other positives.

However, lingering political uncertainty in key international markets and significant currency headwinds might restrict revenue growth.

Hyatt currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked hotel stock is China Lodging Group, Limited (HTHT - Free Report) which currently sports a Zacks Rank #1. Its growth estimate for the full-year 2016 is pegged at 65.7% compared with the industry average of 23.4%.

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