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Hyatt on Expansion Spree, to Introduce Regency Brand in Spain

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The Hotels and Motels industry has been gaining momentum on the back of several factors like a strong economy, higher income, increased consumer confidence and a solid labor market. This, in turn, boosts both occupancy and average daily rate (ADR). Leading hotelier Hyatt Hotels Corporation (H - Free Report) is trying to cash in on this opportunity through continual expansion.

Hyatt announced that its affiliate has inked a deal with an affiliate of Hesperia Hotels & Resorts for the opening of Hyatt Regency Hesperia Madrid as well as Hyatt Regency Barcelona Fira. Following this agreement, the Hyatt Regency brand will not only set its foot in Spain but will also increase the total number of Hyatt hotels in the region to five.

The company said that the bookings for both the hotels will be starting from the beginning of June 2019 as Hyatt affiliated hotels. While Hyatt Regency Hesperia Madrid will be a 170-room hotel, Hyatt Regency Barcelona Fira will have 280 rooms.

This latest move underscores Hyatt’s efforts to expand and strengthen its brand name. We believe that the recent hotel additions will fortify the Hyatt Regency brand’s global footprint and provide a boost to Hyatt’s Owned and Leased Hotels revenues. A glimpse of the company’s price trend reveals that shares of Hyatt have gained 10% year to date.

Strategic Expansion to Drive Growth

Recently, Hyatt announced the opening of Hyatt Regency Addis Ababa. Notably, this is the first Hyatt branded hotel in Ethiopia and the seventh in Africa. The company has also inaugurated Hyatt Regency Al Kout Mall in Kuwait, re-introducing the Hyatt Regency Brand in the country.

Hyatt aims to differentiate its brands from one another by providing distinct travel experiences. The company is also consistently trying to expand its presence worldwide and has expansion plans in the Asia-Pacific, Europe, Africa, the Middle East and Latin America. We believe this will help the Zacks Rank #3 (Hold) company to offset competition from the likes of Marriott (MAR - Free Report) and Extended Stay America (STAY - Free Report) .

Meanwhile, the company’s new signings across its brands globally have consistently outpaced openings. The trend is expected to continue in 2019. Last year, Hyatt registered net room growth of 13.6% on a year-over-year basis. For 2019, it expects unit growth of roughly 7-7.5%, reflecting 80 hotel openings.

Key Pick

A better-ranked stock in the same space is Hilton Worldwide Holdings Inc. (HLT - Free Report) . The company has a Zacks Rank #1 (Strong Buy) and an impressive long-term earnings growth rate of 9.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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