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Hilton Worldwide Holdings Inc. HLT has been continuously focusing on unit growth as a major growth strategy. To this end, the company announced the opening of The Bernic Hotel New York City by Tapestry Collection. Marking the first Tapestry Collection property in New York City, the hotel is located in close proximity to the Grand Central Station and Rockefeller Center.
Notably, in May 2018, Hilton had announced that two of its marketing leading brands — Curio Collection and Tapestry Collection — will boost its portfolio with seven hotels in the United States. Already having six hotels under Tapestry collection, the company further plans to enhance the portfolio of this brand by adding three more hotels.
We observe that shares of Hilton have rallied 30.2% in the past year, outperforming the industry’s growth of 13.3%.
Expansion to Drive Growth & Fend Off Competition
The move underscores Hilton’s absolute focus on aggressively expanding its brands in both the domestic and international markets. To maintain its position as the fastest-growing global hospitality company, Hilton is continuously driving unit growth. In 2017, Hilton witnessed net unit growth of 18,400 rooms. Further, the company expanded its footprint across new countries for a total of 105 countries and territories. For 2018, it projects an approximate 6.5% net unit growth.
Hilton’s relentless expansion helps it in strategizing against growing competition in the industry. The company is continuously facing intense competition from large hotel chains like Marriott MAR and Hyatt H, and also from new channels of distribution in the travel industry. Additional sources of competition include large companies that offer online travel services as part of their business model such as Alibaba BABA. Hilton, therefore, through its disciplined as well as strategic operations, and expansion is trying to navigate stiff competition.
Enhancing Customer Loyalty
Opening of the Bernic seems to be part of Hilton’s efforts to enhance customer loyalty, more so because the brand is a component of Hilton Honors, one of the largest loyalty programs. With about 74 million members, this network emerged as a highly valuable asset for the company. In 2017, Hilton added more than 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, driving incremental value for guests and the overall system.
Hilton currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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