With focus on augmenting its presence worldwide, Hyatt Hotels Corporation (H - Free Report) has large scale expansion and development plans in Asia-Pacific, Europe, Africa, Middle East and Latin America. These markets can help the company gain traction in the hospitality industry, thus boosting its business.
In line with such expansion strategies, a Hyatt affiliate recently entered into a management agreement with ORIX Corporation to open a Hyatt Centric hotel and Hyatt House hotel in Kanazawa, Japan’s north coast in the Hokuriku region, in mid-2020.
Notably, this will be Hyatt’s first joint development and the first Hyatt House hotel in Japan.
Located in close proximity to the JR Kanazawa Station, the key stop on Japan’s newest bullet train route, the hotels will attract guests for both business and tourism purposes. Hyatt Centric Kanazawa will have roughly 250 guest rooms, while Hyatt House Kanazawa will offer 90 apartment-style suites suitable for extended stay. Both the hotels will provide various services and amenities catering to customers’ need and demand, allowing them to enjoy both the brands in one location.
Notably, Japan aims to welcome around 40 million tourists annually by 2020. This is because the tourism industry of Japan is expected to grow around the time owing to the Olympics and Paralympics events in Tokyo. Various new projects are being undertaken by hotel developers and institutional investors in Japan as investments in hotels are likely to prove rewarding in the nation, as reported by CNBC. Thus, it is an opportune time for Hyatt to expand its presence in Japan.
However, Hyatt might face tough competition from hotel chains like Marriott International, Inc. (MAR - Free Report) , Wyndham Worldwide Corporation and Hilton Worldwide Holdings, Inc. (HLT - Free Report) that are looking to expand in these untapped markets. Lingering political uncertainties in some key operating regions and currency headwinds might also restrict revenue growth.
Meanwhile, year to date, shares of Hyatt have slightly underperformed its industry — recording a gain of 11% when compared with the industry’s 12.8%.
Nevertheless, the company is poised to grow on a strong developmental pipeline along with consistent brand establishment and expansion strategies.
Hyatt carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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