Hyatt (H) to Open Luxury Hotel in London, Expands Footprint

Hyatt Hotels Corporation H announced a franchise agreement with Resolution Property to open a luxury hotel in London City/East. The new property will be managed by Cycas Hospitality and will mark Hyatt’s fourth select service Hyatt hotels in Europe. The hotel, which is likely to open in 2020, will be the third Hyatt Place hotel in Greater London.

Notably, this latest move underscores Hyatt’s efforts to expand its footprint and strengthen its select service category. Driven by its global brand presence, shares of Hyatt have gained 30.7% in a year, outperforming the industry’s 0.8% growth.

Selected Service - A Key Catalyst

The Hyatt Place and Hyatt House brands are enabling Hyatt to expand presence globally. This is in sync with its strategy to strengthen the company’s fast-growing select service category. Hyatt strongly believes that the opportunity for properties, which offer selected services at a lower price than full-service hotels, is particularly compelling in certain markets, including India, China and the Middle East. This is because there is a large and growing middle-class population in these markets along with a significant number of local business travelers.

 

Moving ahead, the company intends to grow its select service presence via third-party construction of new franchised properties, conversion and renovation of existing non-Hyatt properties, and in certain cases, participation in the development of new managed properties.

Meanwhile, the recent hotel addition should fortify the Hyatt Place brand’s global presence and boost Hyatt’s Owned and Leased Hotels revenues. This segment performed disappointingly in the last reported quarter. Revenues were down 15.8% on a year-over-year basis (down 16.4% at constant currency).

Zacks Rank & Other Stocks to Consider

Hyatt carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space, include Marriott International, Inc. MAR, Red Lion Hotels Corporation RLH and Wyndham Destinations, Inc. WYND. All these stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Marriott International reported better-than-expected earnings in the trailing four quarter, with an average of 14.7%.

Shares of Red Lion Hotels have gained 32% in the past six months.

Wyndham Destinations delivered positive earnings surprise in the trailing four quarter, with an average of 5.2%.

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