Hyatt Action: Should You Buy The Drop?
TShares of Hyatt Hotels (NYSE: H) have trended downward in recent weeks largely due to a continued decline in travel demand and fears that new coronavirus variants could trigger another disruption. trips. According to recent results, Hyatt has reported a dramatic improvement in hotel occupancy rates in the United States, the Middle East and China, thanks to mass vaccination programs and a drop in new cases of Covid-19 . Notably, the Ownership and Leasing segment occupancy rate fell from 18.6% in the fourth quarter of 2020 to 28.1% in the first quarter of 2021. Currently, Hyatt’s market capitalization is $ 1.3 billion lower than Pre-Covid levels and Trefis believe the stock may continue to see a slight correction as the company declared $ 700 million in operating cash outflows during the pandemic, which is expected to extend into the next few quarters. Our interactive dashboard on Hyatt review highlights historical trends in revenues and margins as well as near-term projections.
A low occupancy rate has a low impact on long-term valuation
As part of the asset relief strategy, Hyatt has converted its owned and leased hotels to the managed and franchised hotel category to mitigate risk and focus on expansion. Notably, the company reported 6.5% net room growth in the first quarter. According to the divestiture plan, Hyatt is targeting $ 500 million in revenue through March 2022. Notably, the Management & Franchise (M&F) segment is expected to generate approximately three-quarters of Hyatt’s profits by 2025. The M&F segment receives revenues. long-term management fees. or franchise agreements with third party owners. Thus, the low occupancy rates due to the pandemic present a lower risk for the long-term valuation of the company. In addition, measures to preserve the company’s cash flow, including the suspension of dividends and the reduction of capital expenditures, serve as protection against any adverse pandemic scenario.
How has Hyatt stock performed compared to the S&P 500?
Hyatt stock rose from levels of around $ 90 in February 2020 (pre-crisis peak) to levels of around $ 47 in March 2020 (as markets bottomed out), implying that H share is down 47% from its approximate pre-crisis peak. With the easing of restrictions and the ongoing vaccination campaign, the stock gained 68% to reach $ 79. In comparison, the S&P 500 index initially fell 34% as Covid-19 cases accelerated outside China and gained 80% after the Fed’s intervention coupled with the launch of the vaccine from Pfizer.
Is there a better alternative to stocking Hyatt hotels? Hyatt Hotels Stock Comparison With Peers summarizes how H compares to its peers on the metrics that matter. You may find other useful comparisons on peer-to-peer comparisons.
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