Hyatt Hotels Corp Class A H

Hyatt's Loyalty Program and New Brands Are Expanding Its High-End Advantage

The human-ingrained desire to travel and record-level equity asset prices are keeping demand for Hyatt's upper-scale and luxury brands elevated, even with headwinds from the Iran War and security concerns in Mexico. Long term, we see Hyatt’s brand intangible asset—the primary source of its narrow moat—strengthening. 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 long-term industry demand, supported by an expanding middle-income class. Hyatt's growing brand advantage is evident in its managed and franchised unit growth, which has averaged 10.1% annually over the past 10 years (2016-25), well above the long-term US industry supply growth rate of 2%, according to STR data. We expect Hyatt to expand its room and revenue share in the hotel industry over the next decade, buoyed by newer brands like House, Place, Apple Leisure Group, Studios, and Select, which support its intangible brand advantage. We see the company’s room growth averaging 5%-6% annually over the next decade, above the 1%-2% supply growth we estimate for the US industry over the same period. Hyatt's brand advantage is also evident in its loyalty membership, which has grown to more than 60 million, up from 20 million in 2019.