Valens Equity Weekly Insights - 2024 07 16
Hyatt Hotels Corporation (H) is positioned to survive and thrive post-pandemic, and it's starting to show signs that it is executing on its long-term transformational goals. Uniform Accounting confirms that the market is not pricing in the full force of this transformation, suggesting equity upside continues to be warranted.Before the pandemic, Hyatt began transforming its business model to focus on a franchise model, similar to what hotel giants Hilton and Marriott have already done. The pandemic has made Hyatt's transformation harder to see, but the company's well capitalized balance sheet has allowed it to survive and strengthen its position exiting the pandemic. As it continues executing on its franchise strategy, the company has the ability to accelerate Uniform ROA far higher than the market is pricing in.
Hyatt's management is closely aligned to focus on growth and improving profitability, two key drivers for upside.
Management confidence in its first quarter earnings call about demand for full-service properties and continued M&A opportunities suggest further reason for ROA expansion.
Hyatt Hotels is a hospitality company engaged in the development, ownership, operation, management, franchising, licensing or provision of services to a portfolio of properties, consisting of full service hotels, select service hotels, resorts, and other properties, including spas and fitness studios, timeshare, fractional, and other forms of residential and vacation properties. The company also manages, provides services to, or licenses its trademarks with respect to residential ownership units that are often adjacent to a Hyatt-branded hotel. Additionally, for condominium ownership units, the company provides services and/or manage the rental programs or homeowner associations associated with such units.
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