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Hilton (HLT) Opens Hilton Wen'an in China, Eyes Unit Growth

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Hilton Worldwide Holdings Inc. (HLT - Free Report) recently announced the opening of a hotel named Hilton Wen'an in the Beijing-Tianjin-Hebei region under its flagship brand Hilton Hotels & Resorts. The hotel, which is owned by Luneng Group Co. Ltd, will be managed by Hilton.

This 227-roomed hotel, offering Hilton’s signature services, lies in close proximity to the Beijing Daxing International Airport and Bai Yang Dian Wetland Park.

The move underscores Hilton’s efforts to expand in international markets and strengthen its brand name. Though the company has productively expanded in China, Latin America and Europe, it continues to face intense competition from both large hotel chains like Marriott (MAR - Free Report) and Hyatt (H - Free Report) as well as smaller independent local hospitality providers like Choice Hotels (CHH - Free Report) .

Consequently, shares of Hilton have declined 17.1% in the past year, better than the industry’s fall of 31.6%.




Expansion — A Major Growth Driver

Hilton continues to drive unit growth to maintain position as the fastest-growing global hospitality company. The company’s continuous efforts toward expanding brands globally help increase its market share.

In third-quarter 2018, the company achieved net unit growth of 14,800 rooms, marking a 24% increase from the prior-year quarter. Further, the company added 113 hotels, taking the room count to 16,100. For 2018, it projects approximately 6.5% net unit growth. It also has more rooms under construction in Europe, the Middle East and the Asia Pacific compared with any other hotel chain.

We expect expansion to drive Hilton’s system-wide comparable revenue per available room (RevPAR). In the third quarter, comparable RevPAR increased 2% year over year on growth in average daily rate (ADR). Also, the recent hotel addition will strengthen the Hilton Hotels & Resorts brand’s presence. Currently, the brand comprises more than 579 hotels in 89 countries and territories.

Efforts to Fortify Loyalty Program

The hotel is part of Hilton Honors, one of the largest loyalty programs in the hospitality industry. Hilton extensively focuses on expanding its loyalty program to drive occupancy and revenues. With about 82 million members, this network created an extremely valuable asset for the company. In fact, in the third quarter of 2018, more than 3.5 million members were added to Hilton Honors. In fact, the loyalty program increased occupancy in the third quarter to nearly 60%.

Hilton currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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