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Hyatt Expands Luxury Brand in Vietnam, Eyes RevPAR Growth

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Hyatt Hotels Corporation (H - Free Report) announced that its affiliate inked a deal with an affiliate of BIM Group to develop a 110-key Park Hyatt Phu Quoc hotel as well as 65 residences. Notably, Park Hyatt Phu Quoc will be the first luxury resort in Vietnam and is slated to open in 2020.

Before this, Hyatt announced the opening of Hyatt Regency Hesperia Madrid as well as Hyatt Regency Barcelona Fira earlier this month.

The move not only underscores Hyatt’s relentless focus on expansion but is also the hotelier’s way of countering growing competition from the likes of Marriott (MAR - Free Report) , Hilton (HLT - Free Report) and smaller hotel chains, including Choice Hotels (CHH - Free Report) .

A glimpse of the company’s price trend reveals that shares of Hyatt have gained 7.1% year to date.

Expansion Strengthens Brand Position

Hyatt aims to differentiate its brands from one another by providing distinct travel experiences. It is also consistently trying to expand presence worldwide and has expansion plans in the Asia Pacific, Europe, Africa, Middle East and Latin America.

Meanwhile, the company’s new signings across its brands globally consistently outpaced openings. This trend is expected to continue in 2019. In 2018, 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.

Our Take

The lodging industry is gaining from higher consumer disposable income, strong economy and low unemployment. Also, increased average daily rate (ADR) has been driving revenue per available room (RevPAR). Hyatt is trying to cash in on this opportunity through continual expansion.

Opening of Park Hyatt Phu Quoc is in line with Hyatt’s efforts to expand and strengthen its brand name. We believe that these recent hotel additions will fortify the Hyatt Park brand’s global footprint and provide a boost to Hyatt’s Owned and Leased Hotels revenues.

As it is, in the fourth quarter of 2018, revenues at Owned and Leased Hotels totaled $461 million, down 10.9% from the year-ago figure number.

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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