Yahoo Finance Here's Why You Should Retain Hyatt (H) Stock in Your Portfolio
Hyatt Hotels Corporation H is likely to benefit from pent-up demand, expansion strategies and strong contributions from the ALG segment. Also, RevPAR recovery in Greater China bodes well.
However, tough industry competition persists.
What is Favoring Hyatt?
Shares of H have increased 18.5% in the past six months compared with the Zacks Hotels and Motels industry’s growth of 7.9%. The company has been benefiting from a rise in leisure transient demand, easing of travel restrictions and heightened airline capacity. During the first quarter of 2023, leisure transient revenues grew 20% year over year and 24% above 2019 levels on a comparable system-wide basis.
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During the first quarter of 2023, system-wide comparable revenue per available room (RevPAR) increased 43% year over year and 6% from the 2019 level, owing to an increase in occupancy and average daily rate (ADR). Also, the demand in Greater China is growing after the easing of travel restrictions. During the quarter, RevPAR in Mainland China was up 10% compared from 2019 levels. Given the restoration of flight capacity and reduction in backlog of new visas (to Chinese travelers), increased access to the region is likely to act as a tailwind in the upcoming periods. Hyatt anticipates system-wide 2023 RevPAR to increase 12%-16% from the 2022 level.
The acquisition of Apple Leisure Group not only doubled Hyatt’s portfolio but also boosted its European footprint by more than 60%. During the first quarter of 2023, the company reported solid segmental performance owing to strength in net package RevPAR, increased membership contracts for ALG’s Unlimited Vacation Club (about 8,791), guest departures (about 689,178) and favorable pricing.
During the quarter, total net package revenues were up 29.2% year over year. The upside was backed by significant net rooms growth across all markets, with 36% growth in Europe and 30% growth in the Americas. Given the emphasis on distribution capabilities with an end-to-end booking process, strong operational execution and destination management services, the company is optimistic about ALG’s performance in 2023.
The company continues to expand its presence to drive growth. Recently, the company announced its plan to expand the Independent Collection brands’ footprint by 2025. By the said time frame, the company’s Independent Collection brands will have 11 new hotels in their portfolio. The company will open its first property in San Miguel de Allende, Mexico, and the first Hyatt-branded hotel in Helsinki, Finland.
Headwinds
The hotel industry is highly competitive, as major hospitality chains with well-established and recognized brands are continuously expanding their global presence. Hyatt is continuously facing intense competition from both large hotel chains and smaller independent local hospitality providers.
Zacks Rank & Key Picks
Hyatt currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here are some better-ranked stocks from the Zacks Consumer Discretionary sector.
MGM Resorts International MGM currently sports a Zacks Rank #1. MGM has a trailing four-quarter earnings surprise of 81%, on average. Shares of the company have increased 18% in the past six months.
The Zacks Consensus Estimate for MGM’s 2023 sales indicates a rise of 14.5%, while the same for EPS indicates a decline of 45.9% from the year-ago period’s levels.
PlayAGS, Inc. AGS carries a Zacks Rank #2 (Buy). AGS has a trailing four-quarter earnings surprise of 155.2%, on average. The stock has increased 7.3% in the past six months.
The Zacks Consensus Estimate for AGS 2023 sales and EPS indicates a rise of 7.7% and 300%, respectively, from the year-ago period’s levels.
Crocs, Inc. CROX carries a Zacks Rank #2. CROX has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of the company have increased 26% in the past six months.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13.2% and 5.8%, respectively, from the year-ago period’s levels.
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Hyatt Hotels Corporation (H) : Free Stock Analysis Report
MGM Resorts International (MGM) : Free Stock Analysis Report
Crocs, Inc. (CROX) : Free Stock Analysis Report
PlayAGS, Inc. (AGS) : Free Stock Analysis Report
