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Hyatt on Expansion Spree, To Open First Andaz Hotel in Dubai

Hyatt Hotels Corporation H has announced plans to open Andaz-branded hotel in 2020 at La Mer. The property will be developed by wasl Asset Management Group, a leading real estate development and management company in Dubai.

This will be the first Andaz-branded hotel in Dubai and second in the United Arab Emirates. The hotel will include 156 rooms and suites, and 409-square-foot residential-style guestrooms. The move underscores the company’s efforts to expand its footprint and strengthen the Andaz brand. Meanwhile, shares of Hyatt have decreased 5.3% in the past year compared with the industry’s collective decline of 24%.

Expansion — A Major Growth Driver

The move is in line with Hyatt’s continued expansion strategies across the globe. It further intends to open properties in the Asia Pacific, Europe, Africa, the Middle East and Latin America. Expansion in these markets will likely help the company gain market share in the hospitality industry, thus, boosting business.

Meanwhile, the Zacks Rank #3 (Hold) company’s new signings across its brands globally have consistently outpaced Hyatt’s openings, with trend expected to continue in 2019. In third-quarter 2018, Hyatt registered net room growth of 7.6% on a year-over-year basis, which marked the 14th successive quarter of recording growth above 6%. The company’s development pipeline grew roughly 6% in the third quarter compared with the prior-year quarter. For 2018, it expects to grow units on a net room basis by roughly 6.5-7%, reflecting 60 hotel openings.

Hyatt’s relentless expansion into various markets is an endeavor to mitigate intense competition in the industry. The company is constantly subjected to competitive pressure from the likes of Marriott MAR and Hilton HLT, each of which has its own aggressive expansion in place.

Key Pick

A top-ranked stock in the same space includes Belmond Ltd. BEL, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Belmond has an impressive long-term earnings growth rate of 15%.

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Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
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