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Hyatt (H) Surges 31% in a Year: What's Driving the Stock?

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In an intensely competitive Hotels & Motels industry, Hyatt Hotels Corporation (H - Free Report) has done exceedingly well and emerged as an attractive investment option. This is quite evident from the stock’s performance in a year. Shares of the company have surged 30.8% compared with the industry’s 1.3% increase.

We believe there is still momentum left in this Zacks Rank #1 (Strong Buy) stock, which is quite evident from upward estimate revisions of 16 cents to $1.59 per share over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks such as Hilton Worldwide Holdings Inc. (HLT - Free Report) , Marriott International, Inc. (MAR - Free Report) and InterContinental Hotels Group PLC , which belong to the same industry, have also gained 18.1%, 21% and 19.4%, respectively, in a year. Let’s delve deeper and find out the reason that kept Hyatt ahead of its peers.

Strategic Expansion to Drive Growth

Hyatt is consistently trying to expand its presence worldwide and has expansion plans in Asia-Pacific, Europe, Africa, Middle East and Latin America. Expansion in these markets should help the company gain market share in the hospitality industry, thus boosting business.

Recently, the company announced its plan expand footprint in Africa by adding nine hotels therein. Backed by such strategic endeavors, the company intends to double the hotel count by 2020-end. Hyatt will also open hotels in Algeria, Ethiopia, Kenya, Senegal, Egypt, Tanzania and Morocco. Favorable business environment and robust tourism spending are attracting hotel companies to Africa, mostly East Africa. Hassle-free visa rules and travel incentives therein have also managed to draw attention from tourists. Per UNWTO Tourism Highlights: 2018 Edition, international tourist arrival in sub-Saharan Africa has outpaced the global average growth.

Selected Service - A Key Catalyst

The Hyatt Place and Hyatt House brands are enabling Hyatt to expand presence globally. This is in sync with its strategy to strengthen the company’s fast-growing select service category. Hyatt strongly believes that the opportunity for properties, which offer selected services at a lower price than full-service hotels, is particularly compelling in certain markets, including India, China and the Middle East. This is because there is a large and growing middle-class population in these markets along with a significant number of local business travelers. Moving ahead, the company intends to grow its select service presence via third-party construction of new franchised properties, conversion and renovation of existing non-Hyatt properties, and in certain cases, participation in the development of new managed properties.

Loyalty Program Continues to Attract Guests

In order to survive in the tough economic environment, Hyatt is continuously devising newer ways to enhance guest experience and raise occupancy. In fact, successful innovation has been a trademark of Hyatt, with a commitment toward impactful architectural design of hotels in both the large-scale convention and smaller leisure markets. In 2017, the company launched a loyalty program — World of Hyatt — which replaced its Gold Passport loyalty program. Notably, World of Hyatt is a platform for guest engagement.

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