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Hilton Opens Hotel in Shanghai, Expands DoubleTree Brand

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Hilton Worldwide Holdings Inc. (HLT - Free Report) expands presence through the opening of a hotel named DoubleTree by Hilton Shanghai Nanxiang in China. The hotel is owned by Junfeng International Group and will be managed by Hilton.

This is the only international hotel in Nanxiang and lies in close proximity to the Hongqiao International Airport. The property is situated near industrial, automobile zones and several tourist attractions in Jiading District. The hotel will cater to rising demand of the Jiading district's business travelers.

We believe that the recent hotel addition will strengthen the DoubleTree brand portfolio. Currently, the brand comprises nearly 543 properties in 43 countries and territories.

The move underscores Hilton’s efforts to expand into international markets and strengthen its brand name. The company has made a name for itself in China, Latin America and Europe. Driven by an expanding global brand presence, shares of Hilton have gained 3% in three months against the industry’s collective decline of 2.5%.

Expansion — The Key to Growth

Hilton’s continuous efforts toward expanding its brands globally help increase market share in the hospitality industry, thereby boosting business operations. This also enhances its brand portfolio and prospects in terms of revenue and profitability. The company has been experiencing strong leisure demand as of late.

During third-quarter 2018, Hilton opened 113 hotels, taking the room count to 16,100. The company achieved net unit growth of 14,800 rooms, indicating a 24% increase from the prior-year quarter. In fact, for 2018, it projects approximately 6.5% net unit growth. As of Sep 30, Hilton’s development pipeline comprised more than 2,420 hotels with 371,000 rooms in 108 countries and territories. The company’s rooms under construction have no parallel compared with any other hotel chain.

We believe expansion will drive Hilton’s system-wide comparable revenue per available room (RevPAR) further. In the third quarter, comparable RevPAR increased 2% year over year. The uptick was driven by growth in average daily rate (ADR).

Zacks Rank & Stocks to Consider

Hilton currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the industry are Belmond Ltd. , Choice Hotels International, Inc. (CHH - Free Report) and Hyatt Hotels Corporation (H - Free Report) . While Belmond sports a Zacks Rank #1 (Strong Buy), Choice Hotels and Hyatt carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Belmond has an expected earnings growth rate of 150% for 2018.

Choice Hotels has an expected earnings growth rate of 33.7% for 2018.

Hyatt reported better-than-expected earnings in the last four quarters, the average beat being 29.2%.

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