Hyatt stock has seen an increase of about 14% since early 2024, reflecting the strong demand in the travel and leisure sector despite global economic concerns. The company’s revenue per available room increased by 5.5% in Q1 2024, driven by higher occupancy rates and room rates, particularly in the Asia and Americas regions. Hyatt’s projected RevPAR for 2024 is expected to rise by 3% to 5%, with net income forecasted to be between $1.135 billion and $1.195 billion for the full year, a significant increase from the previous year.
Over a longer period, Hyatt stock has shown impressive gains of 100% since early 2021, consistently outperforming the S&P 500 index. The stock’s returns in the last three years have varied, with strong performances in 2021 and 2023, while facing a slight decline in 2022. In comparison, the Trefis High Quality Portfolio has consistently outperformed the S&P 500 each year during the same period, indicating better returns with less risk compared to the benchmark index.
Hyatt’s revenue primarily comes from fee-based services and licensing agreements, allowing third-party owners and franchisees to utilize the company’s brand. This asset-light approach has enabled Hyatt to expand rapidly, with a net room growth of 5.5% to 6% expected in 2024. The company has been actively engaging in deal-making activities, such as acquiring the Mr & Mrs Smith booking platform and Apple Leisure Group, to enhance its presence in the luxury resort and hospitality sector. Hyatt aims to generate over 80% of its earnings from fees by 2025, targeting fee-based revenues of $1.1 billion to $1.13 billion for the current year.
Despite the positive outlook for Hyatt’s growth prospects, some analysts believe that the stock may be slightly overvalued at its current price of around $149 per share. With a projected 2024 earnings multiple of 40x, the stock is trading at a premium compared to its peers. Trefis values Hyatt stock at $132 per share, suggesting that it is currently overvalued by about 11%. For a detailed analysis of Hyatt’s valuation and comparison with its competitors, investors can refer to Trefis’ comprehensive report on Hyatt Revenue and Valuation.
Overall, Hyatt’s strong performance in the travel and leisure sector, coupled with its strategic acquisitions and focus on fee-based revenue streams, position the company for future growth. However, investors should carefully consider the current valuation of Hyatt stock before making investment decisions. With the ongoing uncertainty in the macroeconomic environment, including high oil prices and elevated interest rates, the stock’s performance in the coming months will be closely monitored.
