Morningstar

Hyatt Continues to Perform Well

Hyatt outpaced its peers in the third quarter, but shares look overvalued.

Securities In This Article
Hyatt Hotels Corp Class A
(H)

Total RevPAR rose 2.5%, and Hyatt reiterated its 2016 guidance of 2%-3%, which compares with our existing forecast of 2.6%. U.S. (75% of total EBITDA) RevPAR grew 3.8%, well above the roughly 1.5% reported by Hilton and InterContinental. The company continues to experience strength in its House and Place brands (both brands have 6% RevPAR growth year to date) and overall relatively high exposure to select-service hotels (also 6% RevPAR growth year to date in the Americas region), which remain reasons for our optimistic growth forecasts for Hyatt.

These exposures are also driving strong development with unit and pipeline growth up 7% and 9%, respectively, in the quarter. This is tracking in line with our 7% unit growth forecast for 2016 and is supportive of our annual mid-single-digit room growth estimate over the next 10 years (well above the long-term U.S. industry supply growth average of 1.9%). House and Place are 25% of the existing room base and combined saw 13% unit growth.

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About the Author

Dan Wasiolek

Senior Equity Analyst
More from Author

Dan Wasiolek is a senior equity analyst, AM Consumer, for Morningstar*. He covers gaming, lodging, and online travel. Names covered within the gaming industry are Wynn Resorts, Las Vegas Sands, MGM Resorts, Caesars Entertainment, Penn Entertainment, and DraftKings. In the hotel industry Dan covers Marriott, Hilton, InterContinental, Hyatt, Wyndham, Choice, and Accor. Other travel related names under his coverage are Booking Holdings, Expedia, Airbnb, Tripadvisor, Sabre, and Amadeus.

Before joining Morningstar in 2014, Wasiolek spent 16 years as an analyst and portfolio manager covering US mid- and large-cap strategies for Driehaus Capital Management. During the first half of his time at Driehaus, Dan’s responsibilities as an analyst included analyzing and recommending stocks across all sectors and industries for inclusive in the portfolios. Then in the second half of his tenure at Driehaus, Dan was responsible for stock selection and portfolio management of the US mid- and large-cap strategies, as well as co-managing in-house smaller-cap portfolios.

Wasiolek holds a bachelor’s degree in business administration from Illinois Wesleyan University and a master’s degree in business administration, with a concentration in finance, from the DePaul University Kellstadt School of Business.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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