Chicago-based Hyatt Hotels Corporation (H, Financial) is a U.S. hotel giant with global presence in various hospitality formats.
The corporation is listed on NYSE and the cap is over $8 billion. The EBITDA for 2014 stood at $582 million. The company recently bought back approximately $378 million worth stocks. The untapped borrowing capacity under credit revolving facility stands at $ 1.4 billion. The stock has currently been given an average rating of βBuyβ and an average target price of $64.67. Hyatt is consolidating its position through purchase and sales of properties with continued brand presence in the properties sold and to be sold.
Hyatt and hospitality
Hyatt group operates the Hotels and Resorts on ownership, Franchise and Management Licence based models. The company has been in the business for almost 60 years. Some of the sub-brands of Hyatt Hotels Corporation are Hyatt Hotels, Hyatt Regency, Hyatt Place, Hyatt House, Park Hyatt, Hyatt Zilara, Hyatt Ziva, Hyatt Residences and Hyatt Residence Club. Hyatt Group has presence in 48 countries with 570+ hotels. The company operates high priced Hyatt Residence Club, through Hyatt Vacation Ownership Inc on a timeshare basis. The company also runs Vi Living, a chain of high priced retirement homes across U.S. Hyatt at Home is another sub-brand which provides online retail home decor and furnishing solutions. The company has been listed in the top 100 companies in US to work for. Some famous Hyatt properties are The Hyatt Regency β Atlanta, The Hyatt Regency β Chicago, Hyatt Regency β Boston, The Continental Hyatt Hotel (now Andaz West Hollywood) β CA, The Hyatt Regency SFO, The Park Hyatt β Tokyo, Grand Hyatt β Jakarta etc.
Competition
The Corporation competes very closely with Las Vegas based Las Vegas Sands Corp. (LVS, Financial) and Marriott International Inc. (MAR, Financial), headquartered out of Maryland. The market cap of Sands Corp. goes beyond $45 Billion. Some of its renowned properties are The Venetian β Las Vegas, The Palazzo, The Venetian Macao, Marina Bay Sands β Singapore, Sands Cotai β Macao, Sands Macao etc. The current market cap of Marriott stands around $22.3+ Billion. Some of the renowned Marriott brands and sub brands are Marriott Hotels & Resorts, Ritz Carlton, JW Marriott Hotels & Resorts, Bulgari Hotels & Resorts, Renaissance Hotels and Courtyard by Marriott, Marriott Grand Residence Club, Gaylord Hotels and many more.
Industry overview
Low oil prices will fuel increased spending on lifestyle and travel this year with U.S. business travel expected to hit record levels. While the average U.S. business travel spending is expected to rise by 6.2% to reach $310.0 billion, the individual travel is expected to increase by 1.7% to reach 490.4 million trips in 2015. This directly brings good news for hospitality industry in the form of increased hotel occupancy leading to more revenues, more profits, expansion and additional investment for hotels. According to a recent analysis by Hotel News Now the overall hotel room rates in U.S. are expected to increase by 30% by 2020 and the revenue per room is expected to cross $96.
Our take
Fueled by the recovering global economy the valuations of hotel assets are expected to rise approximately by 25% by the end of this calendar year. The slowly yet steadily improving and stabilizing U.S. economy and global markets will have a positive impact on the overall hospitality industry in U.S. and abroad. Hence investment in hospitality stocks may be a lucrative option.
