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Hilton (HLT) Eyes Expansion, Opens Hotel in Central Vietnam

Hilton Worldwide Holdings Inc.HLT has been constantly focusing on unit growth. To this end, the company announced the opening of a hotel named Hilton Da Nang in Central Vietnam under its flagship brand Hilton Hotels & Resorts. This is the third Hilton hotel in the country after Hilton Hanoi Opera and Hilton Garden Inn Hanoi.

This 28-storied hotel with 223 guest rooms lies in close proximity to the Da Nang International Airport near Da Nang Beach. The company expects 15 million tourists to visit Da Nang Beach by 2030 which in turn will drive bookings.

The move underscores Hilton's effort to venture into international markets and strengthen flagship brand presence. The company has successfully expanded in China, Latin America and Europe.

Continual Expansion - A Bright Spot

Hilton's continuous efforts toward expanding brands globally help to increase market share in the hospitality industry. This enhances its brand portfolio and enhances growth prospects in terms of revenue and profitability.

In third-quarter 2018, the company achieved net unit growth of 14,800 rooms, marking 24% increase from the prior-year quarter. Further, the company added 113 hotels to its portfolio taking the room count to 16,100. For 2018, it projects approximately 6.5% net unit growth. It also continues to have more rooms under construction in Europe, the Middle East and the Asia Pacific compared with any other hotel chain.

We expect expansion to drive Hilton's system-wide comparable revenue per available room (RevPAR) further. In the third quarter, comparable RevPAR increased 2% year over year on growth in average daily rate (ADR). Strength in the company's international hotels, mainly in Europe and the Asia Pacific, also contributed to the upside.

We believe that the recent hotel addition will strengthen the Hilton Hotels & Resorts brand's global footprint. Currently, the brand comprises more than 579 hotels in 89 countries and territories.

Bottom Line

Hilton is seen to have a lower mix of luxury and upper upscale rooms compared with large hotel chains like Marriott MAR and Hyatt H . Thus, we believe the recent move is Hilton's strategy to counter competition from established hotel chains as well as small hospitality providers such as Choice Hotels CHH . Meanwhile, its shares have declined 12.2% in the past year, better than the industry 's fall of 26%.

Hilton currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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Hyatt Hotels Corporation (H): Free Stock Analysis Report

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Marriott International (MAR): Free Stock Analysis Report

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


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

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