Hilton (HLT) Partners With Country Garden to Expand in China

Shutterstock photo

Hilton Worldwide Holdings Inc. HLT , through a strategic partnership with Country Garden Hotels Group, is lining up new hotel openings. The Country Garden properties under this agreement will be managed by Hilton's DoubleTree by Hilton and Hilton Garden Inn brands. Hilton's partnership with Country Garden, China's largest property developer will enable the brand to strengthen its hold in China.

In fact, the move is in line with Hilton's strategic efforts to capitalize the flourishing tourism and leisure industry in China. Per a report by World Tourism Economy, the number of inbound tourist arrivals in China increased to 11.88 billion in 2017 compared with 11.12 billion in 2016 and the upside trend is likely to continue in 2018 as well.

Hilton has a portfolio of 470 properties, either operating or under construction in China. In April, the hotelier further expanded its presence in the country by opening Hampton by Hilton Shunde Longjiang, Foshan and the Hampton by Hilton Suzhou Xiangcheng District.

Continual Expansion as Major Growth Driver

The recent move underscores Hilton's expansion strategy that is expected to put the company on a continued growth trajectory. In a bid to maintain its position as the fastest-growing global hospitality company, Hilton is continuing to drive unit growth. In 2017, Hilton witnessed net unit growth of 18,400 rooms. Also, in the first quarter of 2018, the company achieved net unit growth of 7,100 rooms and witnessed a 7% increase from the prior-year quarter. For 2018, the company projects an approximate 6.5% net unit growth. It also continues to have more rooms under construction in Europe, the Middle East and Asia Pacific than any other hotel chain. The company expects greater international expansion in 2018.

Hilton's broad geographic diversity lowers the effect of volatility in individual markets. Evidently, Mexico and Canada have been experiencing strong leisure demand, leading to solid RevPAR growth. Meanwhile, strength in China and Japan have led to solid RevPAR growth in the Asia Pacific region as well. Notably, the company continues to make great progress in its luxury development strategy, anticipating double-digit luxury growth in the next several years. Hilton's new brands including Home2 Suites, Tru by Hilton and Tapestry Collection are also gaining momentum globally.

Expansion Fends Off Competition

Hilton's relentless expansion also helps the company in strategizing against a growing competition in the industry. The hotel industry is highly competitive, as major hospitality chains along with their well-established and recognized brands are continuously expanding their global presence. Hilton is continuously facing intense competition from large hotel chains like Marriott MAR and Hyatt H . It is also facing competition from new channels of distribution in the travel industry. Additional sources of competition include large companies that offer online travel services as part of their business model such as Alibaba BABA . Hilton, therefore, through its disciplined, strategic operations and expansion is trying to navigate stiff competition.

Driven by these strategic efforts and a robust brand image, this Zacks Rank #3 (Hold) company's shares have increased 23.4% in the past year, outperforming the industry's rally of 15.6%. You can see  the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

Marriott International (MAR): Free Stock Analysis Report

Hyatt Hotels Corporation (H): Free Stock Analysis Report

Hilton Worldwide Holdings Inc. (HLT): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: BABA , MAR , H , HLT

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?