Hyatt stock has seen a significant rally of almost 22% since early 2024, outperforming the S&P 500 which has increased by about 10% over the same period. This increase in stock price can be attributed to strong trends in travel and leisure demand, despite concerns about the global economy. Hyatt saw a 9.1% increase in comparable system-wide revenue per available room in Q4 2023, with a 17% increase for the full year driven by rising occupancy levels and higher room rates. Growth in Asia, particularly in China, and North America were the primary drivers of this strong performance.
Hyatt generates revenue through fees, licensing, and other services, allowing third-party owners and franchisees to use its brand and intellectual property. This asset-light strategy has enabled the company to expand quickly, with 29 new hotels added in Q4 2023 and expected net room growth of 5.5% to 6% for 2024. Recent deals, such as the acquisition of the Mr & Mrs Smith booking platform and Apple Leisure Group in 2021, have further bolstered Hyatt’s growth strategy. The company aims to derive over 80% of its earnings from fees by 2025.
Looking at a longer period, Hyatt stock has shown impressive gains of 115% from early January 2021 to around $160 currently, outperforming the S&P 500 by approximately 75% over the past three years. Despite some fluctuations, Hyatt has consistently outperformed the market, with returns of 29% in 2021, -6% in 2022, and 44% in 2023. In comparison, the S&P 500 returned 27% in 2021, -19% in 2022, and 24% in 2023. While other stocks have struggled to beat the S&P 500 consistently, Hyatt has maintained strong performance throughout these years.
The pivot towards fee-based businesses, a focus on premium properties, and a thriving travel market bode well for Hyatt’s future growth. However, the stock is currently slightly overvalued at its current price of $159 per share, trading at about 46x projected 2024 earnings compared to its peers. Trefis values Hyatt stock at approximately $132 per share, which is 16% below the current market price. Investors interested in Hyatt’s valuation and revenue trends can refer to Trefis analysis on Hyatt Revenue to gain more insights into the company’s business model.
In conclusion, the strong performance of Hyatt stock in recent years can be attributed to its focus on growth in the travel and leisure sector, as well as strategic acquisitions and expansion initiatives. While the stock is currently trading at a premium compared to its peers, its long-term prospects remain promising. Investors may want to keep an eye on Hyatt’s future performance and valuation to make informed decisions regarding their investments.
