For Immediate Release
Chicago, IL – November 23, 2016 – Today, Zacks Equity Research discusses the Hotels, Part 2, including Hyatt Hotels Corporation (NYSE:(H - Free Report) -Free Report),Hilton Worldwide Holdings Inc. (NYSE:(HLT - Free Report) -Free Report),Marriott International, Inc. (Nasdaq:(MAR - Free Report) -Free Report), Choice Hotels International Inc. (NYSE:(CHH - Free Report) -Free Report),Wyndham Worldwide Corporation (NYSE:(WYN - Free Report) -Free Report) andBelmond Ltd. (NYSE:(BEL - Free Report) - Free Report).
Industry: Hotels, Part 2
Despite economic and political upheaval in certain pockets all over the world, people are steadfast on spending time with loved ones. They're looking for unique experiences at all price points, and hoteliers believe that their diverse portfolio of travel offerings can continue to deliver on that growing demand.
Thus, there are plenty of reasons to be optimistic about the broader hotel industry over both the short and the long term. Below, we discuss what investors can look forward to in the coming years:
Demand-Supply Gap : The recovery in the broader economy has been a boon for the hotel industry as it has perked up leisure and transient business travel demand. According toHyatt Hotels Corporation (NYSE:(H - Free Report) -Free Report) andHilton Worldwide Holdings Inc. (NYSE:(HLT - Free Report) - Free Report) , the supply-demand environment in the U.S. is favorable. We note that demand growth in the U.S. has outpaced supply growth each year since 2010.
Meanwhile, though the gap between demand growth and supply growth continues to narrow and occupancy growth has slowed, higher rates are expected to keep driving revenue per available room (RevPAR). Considering the long pipeline of hotels, Smith Travel Research (STR) expects the sector’s demand and supply growth to be equal at 1.6% in the U.S. in 2016.
International Expansion : Major hoteliers are exploring growth opportunities abroad, especially in the emerging markets and the outlying areas surrounding major cities. Despite macroeconomic concerns in several emerging economies, hoteliers are forging ahead with expansion plans in markets with great long-term potential.
A number of U.S.-based hoteliers are targeting the unsaturated markets in Asia-Pacific, the Middle East, Brazil, Russia and Africa. Within Asia, China promises lucrative growth opportunities, despite the economic slowdown, with visits expected to increase substantially, moving ahead. In fact, China is the fastest growing lodging market in the world. Interestingly, the country is a major revenue contributor for Marriott International, Inc. (Nasdaq:(MAR - Free Report) - Free Report) .
Apart from China, India is becoming a hot spot for U.S.-based hoteliers with its emergence as a global business hub. Although economic growth rates are slightly lower than China, the country has great long-term growth potential as a tourism market. Among others, Japan, Australia, Singapore and Thailand continue to attract travelers. The key players in the industry are also targeting the high-potential Middle East countries such as Turkey and United Arab Emirates (UAE) that offer strong infrastructure.
Meanwhile, Europe remains an attractive market for hoteliers despite repeated terror attacks and Brexit-induced uncertainties. Major players like Marriott, Hilton, Choice Hotels International Inc. (NYSE:(CHH - Free Report) -Free Report) andWyndham Worldwide Corporation (NYSE:(WYN - Free Report) - Free Report) have a strong foothold in this region.
Brand Renovation to Boost Growth : Hotel chains are meticulously working on guest satisfaction via brand conversion and re-modeling to gain a competitive advantage. Remodeling mostly involves restoration of lobbies and other public spaces, preservation of decorative features if possible, and guestroom upgrades to make the brand more relevant. In fact, brand perception is likely to have a growing influence on the mass market as well as luxury space. With the market becoming increasingly saturated, especially the luxury segment, hotels will have to differentiate themselves.
Brands that can offer something uniquely compelling are likely to grab market share and thus the ability to innovate will be their key to success. Therefore, ace hoteliers like Marriott, Belmond Ltd. (NYSE:(BEL - Free Report) - Free Report) and Hyatt are firing on all cylinders to sync their brands to the order of the day. All these companies carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Moreover, in recent times, brand development is being shaped not only by economic trends, but also by millennials’ tastes. It is Gen Y that constitutes a major portion of the current tourism numbers and their tastes and expectations are widely different from their preceding generations. According to players in the hospitality sector, eco-awareness, wellness and brand distinctiveness are important themes for this generation. Big hotel brands are thus launching more lifestyle hotels, which are mainly boutique brands that benefit from parent companies’ infrastructure.
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