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Hilton Expands Presence of All Suites Brands, Eyes Growth

Zacks Equity Research

Hilton Worldwide Holdings Inc. HLT recently announced the expansion of its All Suits Brands that includes Embassy Suites by Hilton, Homewood Suites by Hilton and Home2 Suites in the airport and urban locations.

Currently, Hilton's brands have nearly 1,075 open properties, where the company opened 33 properties in second-quarter 2019, comprising nine in key airport and downtown areas, two dual-brands, and two Canadian openings. Notably, the All Suites Brands by Hilton have nearly 600 properties in the pipeline.

Expansion Strategy & Solid Brand Position to Drive Revenues

All Suites Brands is consistently trying to expand its presence domestically as well as internationally. The category collectively opened 54 properties in the first half of the year. Overall, in a bid to maintain its position as the fastest-growing global hospitality company, Hilton is continuing to drive unit growth. During the second quarter of 2019, Hilton opened 123 new hotels. It also achieved net unit growth of 15,700 rooms, marking roughly 7% increase from the prior-year quarter.

As of Jun 30, 2019, Hilton's development pipeline comprised nearly 2,490 hotels, with roughly 373,000 rooms across 109 countries and territories including 37 countries and territories. For 2019, the company anticipates net unit growth of 6.5%.

Backed by solid expansion strategies and a strong brand presence, shares of Hilton have gained 28.9% year to date compared with the industry’s 16.5% rally. Notably, the expansion of All Suites category is likely to help Hilton boost its overall revenues and witness increased revenue per available room (RevPAR) for its worldwide comparable system-wide properties.

In the second quarter, RevPAR for worldwide comparable system-wide properties increased 1.4%, driven by a 7% improvement in average daily rate (ADR). In third-quarter 2019, the company anticipates its system-wide RevPAR to witness a year-over-year improvement of 1-2% on a comparable and currency-neutral basis. Aggressive expansion strategies, industry-leading loyalty program coupled with an asset-light business model helped it to deliver impressive results.

Zacks Rank & Stocks to Consider

Currently, Hilton, which shares space with Hyatt Hotels Corporation H and Choice Hotels International, Inc. CHH in the Zacks Hotels and Motels industry, carries a Zacks Rank #3 (Hold). Another better-ranked stock from the same space is Wyndham Destinations, Inc. WYND carrying a Zacks Rank #2 (Buy). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hyatt and Choice Hotels have an impressive long-term earnings growth of 8% and 10%, respectively.

Wyndham Destinations earnings have surpassed the Zacks Consensus Estimate in the trailing four quarters, with average beat being 6.5%.

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