Company Reports

We see Hyatt’s brand intangible asset—the source of its narrow moat—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually over the past 10 years (2014-23), well above the long-term US industry supply increase of 2%, according to STR data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, buoyed by newer brands like House, Place, Apple Leisure Group, and Studios, supporting its intangible brand advantage. We see the company’s room growth averaging 4%-5% annually over the next decade, above the 1%-2% supply increase we estimate for the US industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2024, as improving overseas and group travel augments resilient leisure trips.

Narrow-moat Hyatt posted industry-leading revenue per available room, or revPAR, growth of 5.5% in its first quarter, which compared with the peer range of a drop of 5.9% at narrow-moat Choice to a 4% lift at wide-moat Marriott. In the period, Hyatt benefited from its exposure to luxury segments, which outperformed economy and midscale segments in the US, as well as its presence in international markets and group events, which we expect to remain growth drivers through 2024. Hyatt maintained its 2024 revPAR guidance of 3%-5%, and we don’t expect much change to our 5% estimate. We plan to increase our $138 fair value estimate by a mid-single-digit percentage, mostly due to the company’s equity stake from the February IPO of Juniper Hotels on the India stock exchange. We see shares as appropriately valued.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually over the past 10 years (2014-23), well above the long-term US industry supply lift of 2%, according to Smith Travel Research data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, buoyed by a newer brands like House, Place, Apple Leisure Group, and Studio, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2024, as improving overseas and group travel augments resilient leisure trips.

We plan to raise our $127 fair value estimate for narrow-moat Hyatt Hotels by a mid-single-digit percentage to reflect strong 2023 results and a 2024 outlook that is more optimistic than we anticipated, buoyed by steady travel demand but slightly moderated by lower net room growth. We suspect solid results and the successful execution of the asset sale strategy, particularly with the disposal of Unlimited Vacation Club, propelled a low-double-digit pop in the stock price, rendering the shares fairly valued.

Narrow-moat Hyatt offered some insights into its fourth-quarter and full-year 2023 results after postponing its comprehensive earnings announcement and investor call due to the need for additional time to finalize accounting for its Unlimited Vacation Club. Hyatt's comparable systemwide revenue per available room, or revPAR, popped 17% for the full year, edging our 16% estimate. Management, franchise, license, and other fees totaled $985 million in fiscal 2023, ahead of our $958 million expectation, while 15.5% comparable owned and leased hotels revPAR and 5.9% net rooms growth fell just shy of our 16% and 6.1% growth assumptions, respectively. We observe ongoing strength in Hyatt’s brand, which continues to gain traction as evidenced by an 8.5% year-over-year increase in its room pipeline to 127,000 rooms, equating to an industry-leading 40% of its existing base.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually over the past five years (2018-22), well above the long-term U.S. industry supply lift of 1.8%, according to Smith Travel Research data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, buoyed by a newer brands like House, Place, Apple Leisure Group, and Studio, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually the past five years (2018-22), well above the long-term U.S. industry supply lift of 1.8%, according to Smith Travel Research data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, buoyed by a newer brands like House, Place, Apple Leisure Group, and Studio, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

Narrow-moat Hyatt delivered strong revenue per available room, or revPAR, growth, up 8.9% in its fiscal 2023 third quarter, propelled by resilient demand for leisure (revenue up 2%) and the continued recovery in the group (10%) and business segments (19%), reaching 122%, 105%, and 90% of 2019 levels, respectively. As such, management narrowed its 2023 revPAR guidance to 15%-16% (14%-16% prior), and we plan to nudge our 14% estimate to within that range. That said, while we've been sanguine on travel demand since the summer of 2020, we see Hyatt’s revPAR decelerating to around 2% in fiscal 2024 as travelers grapple with mounting economic headwinds related to inflation and diminishing savings. Further, higher expenses recorded in Hyatt’s owned portfolio and Unlimited Vacation Club fueled a 2% decrease in adjusted EBITDA in the quarter, compelling the firm to lower its fiscal 2023 expectations to $1.005 billion-$1.025 billion (from $1.02 billion-$1.07 billion). As a result, we anticipate moving our $1.08 billion estimate closer to the guided range. Overall, we don’t plan on any material change to our $125 fair value estimate and view shares as slightly undervalued.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually the past five years (2018-22), well above the long-term U.S. industry supply lift of 1.8%, according to Smith Travel Research data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, buoyed by a newer brands like House, Place, Apple Leisure Group, and Studio, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

We see little reason to materially alter our narrow-moat Hyatt $123 fair value estimate and view the high-single-digit percentage pullback in shares (which we suspect is tied to overzealous concerns of a slowdown in travel) as an opportunity to revisit this slightly undervalued name.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually the past five years (2018-22), well above the long-term U.S. industry supply lift of 1.8%, according to Smith Travel Research data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, buoyed by a newer brands like House, Place, Apple Leisure Group, and Studio, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually the past five years (2018-22), well above the long-term U.S. industry supply lift of 1.8%, according to Smith Travel Research data. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, driven by a favorable next-generation traveler position supported by its House, Place, and Apple Leisure Group brands, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

Hyatt Hotels' investor day highlighted the company's ongoing asset-light transformation, positive secular travel trends, and unique positioning, which we believe will support healthy financial results and its brand intangible asset—the source of its narrow moat. We plan to increase our $120 fair value estimate by a low-single-digit percentage to account for a working capital adjustment in 2023, leaving the shares undervalued.

We see Hyatt’s brand intangible asset—the source of its narrow moat rating—strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually the past five years (2018-22), well above long-term U.S. industry supply growth of 1.8%. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, driven by a favorable next-generation traveler position supported by its House, Place, and Apple Leisure Group brands, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 1%-2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

Hyatt's first-quarter revenue per available room, or revPAR, remained strong, up 43% year over year and measuring in at 106% of 2019's level versus 102% in the fourth quarter. Demand was broad-based, with enduring leisure travel (where revenue was at 124% of prepandemic marks and up 20% year over year) and improving group (sales up 70% and ahead of 2019's level) and business (revenue up more than 100% and at 85% of prepandemic amounts) trips. The standout geographically was Greater China, where revPAR was 96% of 2019's level versus 56% three months prior, aided by travel restriction removals Jan. 8, 2023. Hyatt lifted its 2023 revPAR growth guidance to 12%-16% from 10%-15% as it expects further group, business, and Greater China improvement. We expect China to remain a key source of overall travel demand recovery in 2023, as flight capacity increases during the coming months. Also, the outlook for group travel is encouraging, as Hyatt's revenue in the segment is pacing 24% ahead of last year for its Americas region, a 300-basis-points improvement from the fourth quarter. We don't expect to meaningfully change our 2023 revPAR growth estimate of 12% or our $117 per share fair value estimate.

We see Hyatt’s brand intangible asset--the source of its narrow moat rating--strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged more than 10% annually the past five years (2018-22), well above long-term U.S. industry supply growth of 1.8%. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, driven by a favorable next-generation traveler position supported by its House, Place, and Apple Leisure Group brands, supporting its intangible brand advantage. We see the company’s room growth averaging over 5% annually over the next decade, above the 2% supply increase we estimate for the U.S. industry during this time. We are favorable on Hyatt's long-term competitive advantages and think the firm's high luxury, upper upscale, and upscale exposures across the globe position it to outperform industry demand in 2023, as improving overseas and group travel augments resilient leisure trips.

After digesting fourth-quarter results, we plan to lift Hyatt's $109 fair value estimate by a mid-single-digit percentage, driven by stronger revenue per available room, or revPAR, and owned asset margins, leaving shares appropriately valued.

We see Hyatt’s brand intangible asset--the source of its narrow moat rating--strengthening over the long term. Hyatt's growing brand advantage is evident in its managed and franchised unit growth that has averaged 10% annually (excluding the acquisition of Apple Leisure Group in 2021) the past five years (2017-21), well above long-term U.S. industry supply growth of 1.8%. We expect Hyatt to expand room and revenue share in the hotel industry over the next decade, driven by a favorable next-generation traveler position supported by its House, Place, and Apple Leisure Group brands, supporting its intangible brand advantage. We see the company’s room growth averaging over 6% annually over the next decade, above the 2% supply increase we estimate for the U.S. industry during this time. Although we are favorable on Hyatt's long-term competitive advantages, we do think the firm's high luxury, upper upscale, and upscale exposures position it to underperform demand for local road trips at lower price points until confidence in air travel is lifted by a widely distributed vaccine, which we think takes stronger hold in 2022.

We do not plan to materially alter our Hyatt $105 valuation after the hotelier reported improved demand in its third quarter, with commentary for a further lift in 2023, in line with our existing forecast. We see shares as undervalued.

Despite enduring travel demand into the fall of 2022 and our view that it can continue into 2023, investor concerns around future trips and credit availability have grounded share price performance across the industry. As a result, we see meaningful opportunities to book investment stays in Sabre, Accor, Booking Holdings, and Norwegian, which trade at 64%, 42%, 44%, and 54% discounts to our $15, EUR 37.50, $2,900, and $28 fair value estimates, respectively.