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Hyatt to Double Africa Footprint by 2020 With 6 More Hotels

Zacks

Hyatt Hotels Corporation H is consistently trying to augment its presence worldwide. To this end, it has large-scale development plans for Asia-Pacific, Europe, Africa, Middle East and Latin America. Expansion in these lucrative markets is expected to help the company gain market share in the hospitality industry, thus boosting its business.

In-keeping with this strategy, Hyatt recently announced its plan to double the number of Hyatt hotels in Africa by opening six new hotels by 2020. Of the six, four mark the brand’s entry into new countries while two of them increase its footprint in already explored lands.

Notably, the Hyatt Regency brand is anticipated to debut in Algiers, Algeria in late 2018; Douala, Cameroon in late 2020; and Addis Ababa, Ethiopia in the summer of 2018. The brand will also open a hotel in Arusha, Tanzania in early 2019, marking Hyatt’s third property in the country. The Hyatt Centric brand will debut in Dakar, Senegal in the summer of 2019. Meanwhile, a Park Hyatt brand hotel will open in Marrakech, Morocco in 2019, which will be the company’s third property in the country.

Moreover, as part of its long-term plan to expand in Sub-Saharan Africa, Hyatt will continue looking forward to further opportunities across countries including Rwanda, Kenya, Uganda, Mozambique, Ghana and Côte d’Ivoire.


In fact, the company believes that there are significant development opportunities in Africa. Also, tourist and business travel is expected to rise with the launch of a Pan-African, visa-free passport next year along with enhanced connectivity and growth in the region’s airlines.

Going forward, East Africa — one of Hyatt’s primary focus areas — is expected to largely benefit from a growing middle class, the government’s infrastructural investmentsand an escalating international recognition of the region’s stability. These contributed toward 11% growth in Sub-Saharan African tourism in 2016 itself. Further, per UNWTO World Tourism Barometer, as reported by Hyatt the first-half of 2017 witnessed a 14% rise in international arrivals in East Africa year over year, while intra-Africa travel rose nearly 13%.

With the upsurge in tourism in the region, the demand for hotels is expected to improve, thereby making it an opportune time to invest in this space.

However, the company could face tough competition from other hotel chains like Marriott International, Inc. MAR, Wyndham Worldwide Corporation WYN and Hilton Worldwide Holdings, Inc. HLT, who are also looking to expand into these untapped markets. Lingering political uncertainty in some key operating regions and currency headwinds might also restrict revenue growth.

Notably, shares of Hyatt have underperformed its industry recording a gain of 13.3%, compared with the industry’s 20.1% growth in the past six months.

Nevertheless, the company is well poised to grow in the near as well as long term, given a strong developmental pipeline along with consistent brand establishment and expansion strategies.

Hyatt carries a Zacks Rank #3 (Hold) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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