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Hyatt (H) Opens Hotel in Saudi Arabia, Expands Footprint

Zacks Equity Research

Hyatt Hotels Corporation H is consistently making efforts to expand its brand footprint worldwide. To this end, the company has announced the opening of Hyatt House Jeddah Sari Street in the Kingdom of Saudi Arabia.

The hotel, comprising 102 rooms, is located in the Al Salamah District. It has 500 square feet of meeting space. This latest move underscores Hyatt’s efforts to expand and strengthen its brand name in the Middle East.

A glimpse of the company’s price trend reveals that it has outperformed the industry in a year’s time. Shares of Hyatt have lost 14% compared with the industry’s 27.6% decline.

Select Service: A Key Catalyst

Backed by solid performances of the Hyatt Place and Hyatt House brands, Hyatt is expanding its presence globally in a bid to strengthen its fast-growing select service category. The company strongly believes that the opportunity for properties, which offer selected services at a lower price than full-service hotels, is compelling in certain markets including India, China and the Middle East. This is because there is a large and growing middle-class population in these markets along with a significant number of local business travelers.

 

The company is also consistently trying to expand its presence worldwide and has expansion plans in the Asia-Pacific, Europe, Africa, the Middle East and Latin America. We believe this will help Hyatt to counter competition from the likes of Marriott MAR and Hilton HLT.

Furthermore, Hyatt’s new signings across its brands have consistently outpaced its openings, and this trend is expected to continue in 2019. In second-quarter 2018, Hyatt registered 7.6% net room growth on a year-over-year basis, which marked the 14th successive quarter of recording growth above 6%. Also, the company’s development pipeline grew roughly 6% in the third quarter compared with the prior-year quarter number. In 2018, it is expected to have witnessed 6.5-7% unit growth, mirroring 60 hotel openings.

Hyatt currently carries a Zacks Rank #3 (Hold).

Key Pick

A better-ranked stock in the same space is Belmond Ltd. BEL. The company sports a Zacks Rank #1 (Strong Buy) and an impressive long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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