Business Strategy and Outlook
| Dan Wasiolek |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.