Hyatt Hotels Corporation (H - Free Report) revealed plans to open hotel and residences development in 2021 under its Andaz brand. The resort is to be named Andaz Turks & Caicos at Grace Bay and would mark the brand’s entry into the Caribbean. The property will be developed by Vista Development Ltd. of Pronet Capital, LLC.
The resort will include a 59-key hotel and 74-unit branded residences, featuring Hyatt’s signature luxury amenities.
The move underscores the company’s efforts to expand footprint and strengthen the Andaz brand. Driven by its global brand presence, shares of Hyatt have gained 5.2% so far this year against the industry’s decline of 15.3%.
Expansion — A Major Growth Driver
The move is in line with Hyatt’s consistent expansion strategies across the globe. It has further planned to open properties in the Asia-Pacific, Europe, Africa, the Middle East and Latin America. Expansion in these markets should help the company gain market share in the hospitality industry, thus, boosting business.
Subsequently, Hyatt’s new signings across its brands globally have consistently outpaced its openings and this trend is expected to continue in 2018. In second-quarter 2018, it registered net room growth of 7.4% on a year-over-year basis, which marked the 13th successive quarter of recording growth above 6%.
The company added 17 hotels to its portfolio during the quarter under review and its development pipeline grew roughly 10% compared with the prior-year quarter. For 2018, it expects to grow units on a net room basis by roughly 6-6.5%, reflecting 60 hotel openings.
Further, we expect the recent launch to boost Hyatt’s Americas Management and Franchising revenues. Revenues at the segment were up 2.6% year over year in the second quarter of 2017.
We believe that by expanding its brands globally, Hyatt is trying to fend off competition from the likes of Marriott (MAR - Free Report) , Extended Stay (STAY - Free Report) and Hilton (HLT - Free Report) . As it is, the hotel industry is highly competitive as major hospitality chains, with their well-established and recognized brands, are continuously expanding global presence. Hyatt is continuously facing intense competition from both large hotel chains and smaller independent local hospitality providers.
Hyatt currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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