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Hyatt to Launch in Portugal, Eyes Expansion & RevPAR Growth

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Hyatt Hotels Corporation (H - Free Report) announced that its affiliate inked a franchise deal with Realtejo – Hotelaria e Turismo, S.A., to develop the first Hyatt branded hotel in Portugal. The hotel named Hyatt Regency Lisbon will likely open in late 2020 and will be situated in a convenient location.

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) .

Backed by strong brand presence, shares of Hyatt have gained 3.8% over the past three months, in line with the industry’s rally.


 

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, the 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 Hyatt Regency Lisbon is in line with Hyatt’s efforts to expand and strengthen its brand name. The company plans on capitalizing the growing tourist population in Portugal. The number of tourists visiting Portugal increased for eight consecutive years, with 12.8 million travelers visiting in 2018 alone.

Also, we believe that these recent hotel additions will fortify the Hyatt Regency brand’s global footprint and provide a boost to Hyatt’s Owned and Leased Hotels’ revenues. As it is, in the first quarter of 2019, revenues at Owned and Leased Hotels totaled $458 million, down 9.6% from the year-ago figure.

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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