In a bid to maintain its position as the fastest-growing global hospitality company, Hilton Worldwide Holdings Inc. HLT is continuing to drive unit growth. Of late, the company announced that two of its marketing leading brands — Curio Collection and Tapestry Collection — will boost its portfolio with seven hotels in the United States.
Following the news, shares of Hilton gained 1.7% yesterday. In the past three months, the stock has increased 2.4% against the industry’s decline of 2.2%.
In line with the expansion strategy, Curio Collection has launched a hotel in Lynchburg, VA. In the coming few the months it will launch an upscale and luxury hotel in Seattle, Cincinnati and Pittsburgh, respectively. Notably, Curio Collection was launched in 2014 and has been performing really well ever since. The brand currently has a global portfolio of more than 50 remarkable, upper upscale hotels and resorts.
Launched in January 2017, Tapestry Collection will add three more hotels to its portfolio. The company already has six hotels under this brand.
The new hotels are also part of Hilton Honors, which is one of the largest loyalty programs. With about 74 million members, this network has created an extremely valuable asset for the company. In 2017, Hilton added over 11 million members to this program. Also, in the first quarter of 2018, more than 3 million members were added to Hilton Honors. In the meantime, innovations such as the Hilton Honors app continue to boost the program.
In fact, more than half of the occupancy per night takes place through this membership program. The company is focused on making multiple enhancements to its loyalty program in order to make it the most customer-centric program, driving incremental value for guests and the overall system.
This apart, Hilton maintains strong fundamentals and cash flow position that are beneficial for its shareholders. In order to return more to shareholders, the company has transformed into a capital-light operating business backed by the spin-off of a portfolio of hotels and resorts as well as its timeshare business.
Hilton is continuously trying to meet growing demand for hotels and drive its top line by expanding its footprint in the United States. In the first quarter, revenues increased 9.4% year over year driven by the rise in rate and occupancy, and robust demand at the company’s international hotels.
Moreover, the hotel industry is highly competitive as major hospitality chains along with their well-established and recognized brands are continuously expanding global presence. Also, intense competition from large hotel chains like Marriott MAR and Hyatt H as well as smaller independent local hospitality providers remains a potent threat.
Zacks Rank & Key Pick
Hilton currently has a Zacks Rank #3 (Hold). A better-ranked stock from the same space is Marriott Vacations Worldwide Corporation VAC, which carries a Zacks Rank #2 (Buy). The company’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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