Hyatt stock has rallied by almost 27% year-to-date, outperforming the broader markets. There are a couple of trends driving the recent price appreciation for Hyatt stock. Travel and leisure demand has remained robust, despite economic headwinds. Over Q1 2023, Hyatt saw its comparable system-wide revenue per available room rising by a solid 42.9% year-over-year, driven by rising occupancy levels and higher average room rates. The company’s operations in Asia have been a particularly bright spot, as demand in China quickly ramped up following the easing of Covid-19-related travel restrictions late last year. Overall, the company saw average room rates over the last quarter rise by about 12% to $202. Hyatt saw its earnings for Q1 2023 rise to $0.41 per share, compared to a loss of -$0.33 per share in the year-ago quarter.
Investors have also taken positively to Hyatt’s recent dealmaking activity to expand its portfolio in recent years. For instance, the company purchased the Apple Leisure group – a company focused on vacation packages, resort management services, and distribution solutions – in 2021. The company also closed a deal to buy Dream Hotel Group’s lifestyle hotel brand and management platform. These deals are relatively asset-light and also focus on more premium properties that are currently in demand. Hyatt estimates that it will derive over 80% of its earnings from fees by 2025.
That said, with Hyatt rallying to levels of about $110 per share presently, we think the stock is a bit expensive. Hyatt trades at roughly 38x projected 2023 earnings. This is high compared to Marriott stock, which trades at about 20x. Moreover, despite the recent signs of cooling inflation, the near-term picture for the U.S. economy could remain mixed, given that interest rates remain at near the highest levels seen in almost 15 years. We value H stock at about $112 per share, which is slightly below the current market price. See our analysis on Hyatt Valuation: Is H Stock Expensive Or Cheap? for more details on Hyatt’s valuation and how it compares with peers. For more information on Hyatt’s business model and revenue trends, check out our dashboard on Hyatt Revenue: How H Makes Money.
What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates
Read the full article here
