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Here's Why You Should Retain Hyatt (H) Stock in Your Portfolio
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Hyatt Hotels Corporation (H - Free Report) will likely benefit from solid leisure transient demand, a favorable pricing environment and Apple Leisure Group integration. Also, the emphasis on strategic acquisitions bodes well. However, a volatile macroeconomic environment is a concern.
Let us delve into the factors that highlight why investors should retain the stock for now.
Growth Catalysts
Hyatt has benefited from a rise in leisure transient demand, easing travel restrictions and ramped-up airline capacity. During the second quarter of 2023, leisure transient revenues grew 7% year over year and 26% compared with 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 throughout 2023.
Increased focus on the integration of Apple Leisure Group bodes well. In second-quarter 2023, the company reported solid segmental performance owing to strength in net package RevPAR, increased membership contracts for ALG’s Unlimited Vacation Club (about 9,000), guest departures (about 740,000) and favorable pricing. During the quarter, total net package revenues were up 7.8% year over year. The upside was backed by significant average daily rate (ADR) growth across all markets. Also, solid demand for leisure destinations, increased airlift capacity (for key Americas destinations) and a favorable pricing environment were positives. Apple Leisure Group Vacations business improved profitability and margins through strong business and technology optimization.
Given the emphasis on 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 2023.
An emphasis on acquisitions bodes well for Hyatt. Recently, Hyatt completed the acquisition of Mr & Mrs Smith. This London-based platform offers direct booking access to more than 1500 boutique and luxury properties across the globe, primarily in Western Europe. This will offer World of Hyatt members varied options in rewarding stays and experiences.
The early acquisition of Dream Hotel Group, a vivid portfolio of lifestyle hotel brands including Dream Hotels, The Chatwal, The Time New York and Unscripted Hotels, will help Hyatt to expand its brand presence across destinations like Nashville, Hollywood, South Beach and New York City. With the upcoming property, Dream Valle de Guadalupe, the company will be able to expand its presence in the new leisure market of Mexico in 2024.
Concerns
Image Source: Zacks Investment Research
Shares of Hyatt have declined 5.9% in the past three months against the industry’s 6.1% growth. A slowdown in new construction activities and foreign currency fluctuations dented the company's performance. Moving ahead, the company remains cautious of the volatile macroeconomic environment.
The company’s operations are pursuant to financial market uncertainties due to liquidity constraints. Financing conditions in certain regions have been challenging due to rising interest rates. The company is cautious as further challenges pave the path for the inability to access cash and the threat of new financing arrangements.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 55.1% and 182.1%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 34.6% on average. Shares of LYV have increased 1.5% in the past year.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS indicates a rise of 21% and 57.8%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) currently carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 42.6% on average. Shares of OSW have increased 25.9% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 44.5% and 117.9%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Hyatt (H) Stock in Your Portfolio
Hyatt Hotels Corporation (H - Free Report) will likely benefit from solid leisure transient demand, a favorable pricing environment and Apple Leisure Group integration. Also, the emphasis on strategic acquisitions bodes well. However, a volatile macroeconomic environment is a concern.
Let us delve into the factors that highlight why investors should retain the stock for now.
Growth Catalysts
Hyatt has benefited from a rise in leisure transient demand, easing travel restrictions and ramped-up airline capacity. During the second quarter of 2023, leisure transient revenues grew 7% year over year and 26% compared with 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 throughout 2023.
Increased focus on the integration of Apple Leisure Group bodes well. In second-quarter 2023, the company reported solid segmental performance owing to strength in net package RevPAR, increased membership contracts for ALG’s Unlimited Vacation Club (about 9,000), guest departures (about 740,000) and favorable pricing. During the quarter, total net package revenues were up 7.8% year over year. The upside was backed by significant average daily rate (ADR) growth across all markets. Also, solid demand for leisure destinations, increased airlift capacity (for key Americas destinations) and a favorable pricing environment were positives. Apple Leisure Group Vacations business improved profitability and margins through strong business and technology optimization.
Given the emphasis on 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 2023.
An emphasis on acquisitions bodes well for Hyatt. Recently, Hyatt completed the acquisition of Mr & Mrs Smith. This London-based platform offers direct booking access to more than 1500 boutique and luxury properties across the globe, primarily in Western Europe. This will offer World of Hyatt members varied options in rewarding stays and experiences.
The early acquisition of Dream Hotel Group, a vivid portfolio of lifestyle hotel brands including Dream Hotels, The Chatwal, The Time New York and Unscripted Hotels, will help Hyatt to expand its brand presence across destinations like Nashville, Hollywood, South Beach and New York City. With the upcoming property, Dream Valle de Guadalupe, the company will be able to expand its presence in the new leisure market of Mexico in 2024.
Concerns
Image Source: Zacks Investment Research
Shares of Hyatt have declined 5.9% in the past three months against the industry’s 6.1% growth. A slowdown in new construction activities and foreign currency fluctuations dented the company's performance. Moving ahead, the company remains cautious of the volatile macroeconomic environment.
The company’s operations are pursuant to financial market uncertainties due to liquidity constraints. Financing conditions in certain regions have been challenging due to rising interest rates. The company is cautious as further challenges pave the path for the inability to access cash and the threat of new financing arrangements.
Zacks Rank & Key Picks
Hyatt currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are:
Royal Caribbean Cruises Ltd. (RCL - Free Report) sports a Zacks Rank #1 (Strong Buy). RCL has a trailing four-quarter earnings surprise of 28.5% on average. Shares of RCL have gained 110.3% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for RCL’s 2023 sales and EPS indicates a rise of 55.1% and 182.1%, respectively, from the year-ago period’s levels.
Live Nation Entertainment, Inc. (LYV - Free Report) sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 34.6% on average. Shares of LYV have increased 1.5% in the past year.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS indicates a rise of 21% and 57.8%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited (OSW - Free Report) currently carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 42.6% on average. Shares of OSW have increased 25.9% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 44.5% and 117.9%, respectively, from the year-ago period’s levels.