Hyatt (H) Stock on Fire: Outpaces Industry in The Past Year
Hyatt Hotels Corporation H is benefiting from solid leisure transient demand, integration of Apple Leisure Group and asset disposition commitment. This and the emphasis on asset-light deals bode well.
Shares of Hyatt have increased 12.4% in the past year against the industry’s decline of 8.8%. The price performance was backed by a solid earnings surprise history. Hyatt’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters. Earnings estimates for full-year 2023 have moved up 36% in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #2 (Buy). This indicates robust fundamentals and expectations of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Major Growth Drivers
Hyatt continues to witness robust recovery during third-quarter 2022. The upside can be attributed to a rise in leisure transient demand, easing of travel restrictions and ramped-up airline capacity. During the third quarter, leisure transient revenues reached 20% above 2019 levels on a comparable system-wide basis. Given the continued strength of leisure travel demand, favorable pricing environment and airlift activities, the company is optimistic about continued growth in demand for the remaining of 2022 and the first quarter of 2023.
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Increased focus on the integration of Apple Leisure Group Bode well. During the third quarter, the company reported solid segmental performance owing to strength in net package RevPAR, increased membership contracts for ALG’s Unlimited Vacation Club (approximately 9,200), guest departures (approximately 682,000) and strong unit pricing. During the quarter, total net package revenue was up 91% from 2019 levels. The upside was backed by significant net room growth, courtesy of ALG’s expansion in Europe and organic growth in the Americas. Also, solid demand for leisure destinations, increased airlift capacity and a favorable pricing environment added to the positives. During the third quarter, the ALG segment contributed $363 million to the company’s total revenues. Given distribution capabilities with an end-to-end booking process and strong operational execution, an integrated experience (with AMR and UVC program) and destination management services, the company is optimistic about ALG’s performance in 2022.
Emphasis on asset-light deals to broaden presence in key markets and service platforms bode well. During the third quarter, the company announced the signing of deals to manage third-party constructed or third-party developed Miravals globally in the United States, the Middle East and in Europe. During the third quarter, the company announced a collaboration with Lindner Hotels to boost its presence in Europe. With an expanded footprint of 15 new markets, the initiative includes integrating 30 hotels (and 5,500 rooms) into the GDB by Hyatt brand. The company stated that the majority of the hotels are expected to join its system by 2022 end. The company anticipates the initiative to boost its room count in Europe by nearly 25,000 rooms. This apart, the company announced the addition of five resorts in Bulgaria under ALG Brands. The company anticipates opening the resorts in 2023. The company announced a joint venture with Kiraku to launch Atona (a new luxury hospitality brand of modern-style hot springs ryokans) in Japan. The initiative focuses on boosting the company’s luxury footprint.
During the third quarter of 2022, the company made significant progress with respect to its $2.0 billion asset disposition commitment. The company completed sale agreements for assets (valued at $721 million) related to its owned and leased portfolio. The properties include Hyatt Regency Greenwich (in Connecticut) and Hyatt Regency Mainz (Germany). On Aug 3, the company entered into an agreement with an unrelated third party to acquire Hotel Irvine (for approximately $135 million). The company anticipates fulfilling a $2-billion disposition commitment by 2024-end. With an increased focus on enhancing the guest experience, the initiatives and a strong customer base are likely to pave the path for strong management fee streams in the upcoming periods.
Other Key Picks
Some other top-ranked stocks in the Zacks Consumer Discretionary sector are Monarch Casino & Resort, Inc. MCRI, Hilton Grand Vacations Inc. HGV and Crocs, Inc. CROX.
Monarch Casino sports a Zacks Rank #1. MCRI has a trailing four-quarter earnings surprise of 9.1%, on average. The stock has gained 17.3% in the past year.
The Zacks Consensus Estimate for MCRI’s 2022 sales and earnings per share (EPS) indicates growth of 21.1% and 29.2%, respectively, from the year-ago period’s reported levels.
Hilton Grand Vacations sports a Zacks Rank #1. HGV has a trailing four-quarter earnings surprise of 652.3%, on average. The stock has declined 18.6% in the past year.
The Zacks Consensus Estimate for HGV’s current financial year sales and EPS indicates a surge of 63.8% and 60.9%, respectively, from the year-ago period’s reported levels.
Crocs currently has a Zacks Rank #2. CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 39.2% in the past year.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 51.5% and 23.7%, respectively, from the year-ago period’s levels.
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Hyatt Hotels Corporation (H) : Free Stock Analysis Report
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