Hyatt Hotels Corporation (H) recently inked a management agreement with Bienes y Comercio, S.A. to unveil a Grand Hyatt hotel in Bogota, Colombia in early 2015. The new hotel will feature 297 guestrooms, including 53 suites, more than 24,000 square feet of meeting space along with numerous other facilities, and will cost around $130 million.
We believe Bogota is a strategic fit for openings, as it is the capital and largest city in Colombia and one of the leading locations in Latin America. This upcoming property at Bogota marks the second Hyatt-branded hotel under construction in Colombia. The other one is a Hyatt Regency, under development at Cartagena and likely to open in late 2015. Both Bogota and Cartagena are considered as popular destinations for leisure and business tours. Management remains focused on opening more Hyatt-branded hotels in Colombia going ahead.
Located in a prime location adjacent to the International Airport, the Bogota property will be vital to Colombia’s most important corporate real estate project — Ciudad Empresarial. This multi-use property houses several corporate offices, premium retail spaces, meeting areas and many other high-end amenities. Further, the Bogota hotel will be in proximity to several government ministries making it easier to attract business travelers.
The company should be wary of its competitors, as they too are in an expansion mode. In fact, Hyatt’s major competitors, Starwood Hotels & Resorts Worldwide Inc. (HOT) and Marriott International Inc. (MAR) also have their presence in Bogota.
With the affluence of the middle class in Latin America, inclination to spend on travel and leisure has somewhat risen. Apart from tourism, the region is also successfully emerging as a business hub. All these factors testify to Hyatt’s one of the largest hotel development pipelines in Latin America.
Last month, this Chicago-based company acquired a property in Mexico City and rebranded it as Hyatt Regency. There are thirteen Hyatt-branded hotels in the pipeline in Latin America. Once these properties are unveiled, Hyatt will boast of as many as 21 assets in the most desirable locations across Latin America.
Hyatt currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are maintaining our long-term Neutral recommendation on the stock.
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