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Hyatt to Open First Dual-Brand Select-Service Hotel in 2020


Hyatt Hotels Corporation H is planning to open its first dual-branded Hyatt Place and Hyatt House hotels in Europe, by the second half of 2020. Opening of Hyatt Place Paris Charles De Gaulle Airport as well as Hyatt House Paris Charles De Gaulle Airport will mark the inception of Hyatt’s select-service brands in France and also round up the number of Hyatt hotels to 10 in the country.

Notably, Cycas Hospitality, an affiliate of extended stay, entered into a franchise term with a member of Hyatt to expand the company’s select-service brands in Europe. The hotels are designed as such that they can offer a range of shared services and amenities, meeting the needs of both transient guests or extended-stay customers.

We observe that shares of Hyatt have rallied 37.3% in the past year, outperforming its industry’s gain of 28.7%.

Expanding Select Service Presence Helps Gain Market Share

Expanding the footprint of Hyatt Place and Hyatt House brands underscores Hyatt’s relentless efforts to strengthen its fast growing select-service category. The company strongly believes that the opportunity for properties that offer selected services at a lower price than full-service hotels is particularly compelling for a large spread of consumers. These services cater to the needs of a growing number of local business travelers.

Hyatt, therefore, is growing its select-service presence via third-party construction of new franchised properties, conversion and renovation of existing non-Hyatt properties, and in certain cases, participation in the development of new managed properties.

By doing so, Hyatt is systematically expanding its global presence and capitalizing on demand for hotels in international markets. Expansion in these markets should help the company gain market share in the hospitality industry, thus boosting business.

Our Take

We expect the recent move to boost the revenues of Hyatt’s Owned and Leased Hotels in the first quarter of 2018. The performance of the segment was particularly weak in the last reported quarter. Revenues were down 2.5% year over year (down 3.6% at constant currency).

Comparable Owned and Leased hotels RevPAR however increased 5.4% (up 4.1% at constant currency). ADR increased 2.4% in constant currency and occupancy rose 120 basis points from a year ago.

Zacks Rank & Stocks to Consider

Hyatt carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industry include Hilton Grand Vacations HGV, Marriot Vacations Worldwide VAC and Wyndham Worldwide WYN. While Hilton Grand and Marriot Vacations sport a Zacks Rank #1 (Strong Buy), Wyndham carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hilton Grand, Marriot Vacations and Wyndham’s 2018 earnings are expected to rise 43.7%, 20.1% and 30.4%, respectively.

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