Hilton Worldwide Holdings Inc. (HLT - Free Report) recently announced the opening of a hotel named Hampton by Hilton Dubai Airport in the Middle East, the biggest property in Hampton's portfolio.
This 420-roomed hotel lies in close proximity to the Dubai International Airport and the Dubai Airport Freezone Authority (DAFZA) and features Hilton’s signature services.
The move underscores Hilton’s efforts to venture into international markets and strengthen its brand name. Toward this end, the company has successfully carved a position in China, Latin America and Europe. Driven by an expanding global brand presence, shares of Hilton have gained 18.5% in the past year, outperforming the industry’s collective growth of 3.2%.
Continual Expansion Drives Growth
Hilton’s continuous efforts toward expanding its brands globally help to increase its market share in the hospitality industry, thereby boosting its business operations. This enhances its brand portfolio and creates prospects in terms of revenue and profitability.
In second-quarter 2018, the company achieved net unit growth of 15,800 rooms, marking an 18% increase from the prior-year quarter. The company also added 123 hotels to its portfolio. In total, the company has 23,000 net rooms year to date, up 8% from the prior-year level and projects roughly 6.5% net unit growth this year. At the end of the second quarter, the company had 186,000 rooms under construction in Europe, the Middle East and Asia Pacific, relatively far more than any other hotel chain. Additionally, 194,000 rooms are there in the pipeline for regions outside the United States.
We believe such widespread expansion will drive Hilton’s system-wide comparable revenue per available room (RevPAR) further. In the second quarter, comparable RevPAR increased 4% year over year. The improvement was driven by growth in occupancy and average daily rate (ADR). Strength in the company’s international hotels mainly in Europe and the Asia Pacific also contributed to the increase.
Efforts to Fortify Hampton Brand
We believe that the recent hotel addition will strengthen the Hampton brand’s global footprint. Currently, the brand comprises more than 2,380 hotels across 22 countries and territories. Recently, it forayed into Kazakhstan and is expected to further expand in Argentina, Chile and France.
Zacks Rank & Stocks to Consider
Hilton carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Products - Discretionary sector are PCM, Inc. (PCMI - Free Report) , SodaStream International Ltd. and Summer Infant, Inc. (SUMR - Free Report) , carrying a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
PCM has an expected current-year earnings growth rate of 82.5%.
SodaStream reported better-than-expected earnings in the last four quarters, the average beat being 36.4%.
Summer Infant has an expected current-year earnings growth rate of 114.3%.
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