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Hyatt (H) Expands Portfolio by Adding Hotel SOFIA Barcelona
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The U.S. hotel industry has been benefitting from increased consumer spending, stemming from a strong economy, higher income and decent wage gains. Leading hotelier Hyatt Hotels Corporation (H - Free Report) is trying to cash in on this opportunity. The company’s primary growth instigator has been continual expansion.
To this end, Hyatt has recently included Hotel SOFIA Barcelona in its The Unbound Collection by Hyatt, marking the company’s first hotel in Barcelona and third property in Spain. The 465-room hotel flaunts a convenient location and has luxury amenities for a varied range of travelers.
The move not only reflects Hyatt’s consistent expansion strategies but also is part of the company’s ongoing asset-recycling program. Meanwhile, shares of Hyatt have decreased 4.4% in the past year compared with the industry’s collective decline of 21.8%.
Expansion — Key Growth Driver
Hyatt aims to differentiate its brands from one another by providing distinct travel experiences. The company is consistently trying to expand its presence worldwide. It also has expansion plans for the Asia Pacific, Europe, Africa, the Middle East and Latin America.
To this end, the company recently announced the opening of Hyatt Place Riyadh Al Sulaimania in Saudi Arabia and Hyatt Regency Aqaba Ayla Resort in Jordan. The company’s new signings across its brands globally consistently outpaced its openings. This trend is expected to continue in 2018. The company’s development pipeline grew roughly 6% in the third quarter compared with the prior-year quarter. For 2018, it expects units on a net room basis to grow roughly 6.5-7%, reflecting 60 hotel openings.
Our Take
We believe that the addition of Hotel SOFIA Barcelona will boost Hyatt’s Owned and Leased Hotels segment’s revenues. In the last reported quarter, the segment’s revenues declined 13.3% year over year.
Further, Hyatt’s relentless expansion into various markets is an endeavor to mitigate intense competition in the industry. The company is constantly subjected to competitive pressure from the likes of Marriott (MAR - Free Report) and Hilton (HLT - Free Report) , each of which has their own aggressive expansion in place.
Increasingly, the company faces competition from new channels of distribution in the travel industry. Additional sources of competition include large companies that offer online travel services as part of their business model such as Alibaba (BABA - Free Report) , search engines such as Google and peer-to-peer inventory sources that allow travelers to book stays on websites that facilitate short-term rental homes and apartments from owners, thereby providing an alternative to hotel rooms such as Airbnb and HomeAway. Unless Hyatt counters these competitions with appropriate strategies, it may pose a concern to the company’s future profitability.
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Hyatt (H) Expands Portfolio by Adding Hotel SOFIA Barcelona
The U.S. hotel industry has been benefitting from increased consumer spending, stemming from a strong economy, higher income and decent wage gains. Leading hotelier Hyatt Hotels Corporation (H - Free Report) is trying to cash in on this opportunity. The company’s primary growth instigator has been continual expansion.
To this end, Hyatt has recently included Hotel SOFIA Barcelona in its The Unbound Collection by Hyatt, marking the company’s first hotel in Barcelona and third property in Spain. The 465-room hotel flaunts a convenient location and has luxury amenities for a varied range of travelers.
The move not only reflects Hyatt’s consistent expansion strategies but also is part of the company’s ongoing asset-recycling program. Meanwhile, shares of Hyatt have decreased 4.4% in the past year compared with the industry’s collective decline of 21.8%.
Expansion — Key Growth Driver
Hyatt aims to differentiate its brands from one another by providing distinct travel experiences. The company is consistently trying to expand its presence worldwide. It also has expansion plans for the Asia Pacific, Europe, Africa, the Middle East and Latin America.
To this end, the company recently announced the opening of Hyatt Place Riyadh Al Sulaimania in Saudi Arabia and Hyatt Regency Aqaba Ayla Resort in Jordan. The company’s new signings across its brands globally consistently outpaced its openings. This trend is expected to continue in 2018. The company’s development pipeline grew roughly 6% in the third quarter compared with the prior-year quarter. For 2018, it expects units on a net room basis to grow roughly 6.5-7%, reflecting 60 hotel openings.
Our Take
We believe that the addition of Hotel SOFIA Barcelona will boost Hyatt’s Owned and Leased Hotels segment’s revenues. In the last reported quarter, the segment’s revenues declined 13.3% year over year.
Further, Hyatt’s relentless expansion into various markets is an endeavor to mitigate intense competition in the industry. The company is constantly subjected to competitive pressure from the likes of Marriott (MAR - Free Report) and Hilton (HLT - Free Report) , each of which has their own aggressive expansion in place.
Increasingly, the company faces competition from new channels of distribution in the travel industry. Additional sources of competition include large companies that offer online travel services as part of their business model such as Alibaba (BABA - Free Report) , search engines such as Google and peer-to-peer inventory sources that allow travelers to book stays on websites that facilitate short-term rental homes and apartments from owners, thereby providing an alternative to hotel rooms such as Airbnb and HomeAway. Unless Hyatt counters these competitions with appropriate strategies, it may pose a concern to the company’s future profitability.
Hyatt currently 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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