Hyatt (H) Up 52% in the Past 6 Months: Here's What's Driving It

Hyatt Hotels Corporation H is benefiting from robust leisure and business transient demand, expansion initiatives and loyalty program. Also, strengthening group demand in the United States is encouraging.

Shares of this Zacks Rank #2 (Buy) company grew 52.4% in the past six months, outperforming the Zacks Hotels and Motels industry’s 29.7% growth. The uptrend is most likely attributable to the strong global travel demand, especially improvements in Greater China, resulting in the increase in occupancy and average daily rate (ADR).

The company’s earnings estimate for first-quarter 2024 has moved north in the past 30 days to 74 cents per share from 72 cents, showcasing growth of 80.5% year over year. Hyatt also delivered a trailing four-quarter earnings surprise of 17.8%, on average. The positive trend signifies bullish analysts’ sentiments, robust fundamentals and the continuation of an outperformance in the near term.

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Growth Driving Factors of the Stock

Robust Travel Demand Bode Well: Hyatt is witnessing solid growth in its comparable system-wide revenue per available room, mainly driven by an increase in occupancy and ADR. This uptick is primarily attributable to strong global travel demand, especially among leisure and business guests, and group customers. Travel demand improvement in Greater China is aiding the uptrend to a great extent, along with growing group travel demand in the US.

During the fourth quarter of 2023, the company reported robust demand across all customer segments, with notable 6% year-over-year increases in transient revenues and resort market revenues, particularly in the Americas. Also in the quarter, the revenues from business transient customers increased 14% year over year and reached 93% of 2019 levels globally. With people returning to the office, travel restrictions were eased and more cross-border travel resumed. Thus, the company remains optimistic about the recovery of business transient and its continued momentum over the year.

Expansion Initiatives: Hyatt is consistently trying to expand its presence worldwide and has further expansion plans in Asia-Pacific, Europe, Africa, the Middle East and Latin America. Expansion in these markets would help the company gain market share in the hospitality industry, thus boosting business.

During the fourth quarter of 2023, the company announced a strategic agreement with the Hangzhou Trade and Tourism Group and Dragon Group to develop more than 60 hotels in China under select service and independent collection brands in the coming years.

Furthermore, in 2023, Hyatt expanded its portfolio with the addition of 101 new hotels (or 23,965 rooms), incorporating 43 hotels (13,223 rooms) via hotel conversions. In 2024, it expects robust portfolio expansion propelled by organic growth and conversion opportunities. It anticipates unit growth to increase in the range of 5.5% and 6% on a net-room basis in 2024.

Loyalty Program: Hyatt is continuously devising newer ways to enhance guest experience and raise occupancy, one of which ways is its top-tier loyalty program, World of Hyatt. Launched in 2017, this loyalty program has aided the company’s top-line growth by increasing guest engagements. Furthermore, the collaboration with Built Rewards program in 2021 also bodes well.

In 2023, the company’s membership levels increased approximately 22% year over year, reaching nearly 44 million members. Additionally, it reported unprecedented spending levels within the co-branded credit card portfolio.

The company remains steadfast in its commitment to extend offerings into new markets and diverse price points to amplify the network effect, fostering loyalty membership growth and appealing to potential hotel developers and owners, all while managing overall distribution costs effectively.

Other Key Picks

Here are some other top-ranked stocks from the Consumer Discretionary sector.

Stride, Inc. LRN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

LRN has a trailing four-quarter earnings surprise of 45.2%, on average. The stock has gained 40.2% in the past six months. The Zacks Consensus Estimate for LRN’s fiscal 2024 sales and earnings per share (EPS) indicates an increase of 10% and 42.1%, respectively, from the year-ago levels.

Adtalem Global Education Inc. ATGE currently sports a Zacks Rank of 1. ATGE has a trailing four-quarter earnings surprise of 16.9%, on average. The stock has increased 17.8% in the past six months.

The Zacks Consensus Estimate for ATGE’s fiscal 2024 sales and EPS implies growth of 6.4% and 10.2%, respectively, from the year-ago levels.

Ralph Lauren Corporation RL presently sports a Zacks Rank of 1. RL has a trailing four-quarter earnings surprise of 18.7%, on average. The stock has surged 64.2% in the past six months.

The Zacks Consensus Estimate for RL’s fiscal 2025 sales and EPS implies growth of 4.2% and 9.5%, respectively, from the year-ago levels.

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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.

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