H - Embedded Expectations Analysis - 2021 03 11
Hyatt Hotels Corporation (H:USA) currently trades at a premium relative to UAFRS-based (Uniform) assets, with a 1.2x Uniform P/B. At these levels, the market is pricing in modestly positive expectations for the firm. Although management may have concerns about demand recovery, hybrid meetings solutions, and asset sales prices, market expectations may still be too pessimistic. As such, longer-term outperformance remains warrantedSpecifically, management may lack confidence in their ability to sustain group rooms revenue growth, recover franchise fee revenues, and mitigate EBITDA losses. In addition, they may have concerns about the pandemic's continued impact on their business, the pace of business travel and asset price recovery, and the potential for further booking cancellations. Furthermore, management may be exaggerating the potential of their digital initiatives, the capabilities of their hybrid meeting solutions, and their ability to address consumer meeting needs. Moreover, they may be concerned about their asset sales prices, continued weakness in upscale and luxury properties, and the sustainability of high lead generation levels
Although management may have concerns about demand recovery, hybrid meetings solutions, and asset sales prices, market expectations may still be too bearish given the firm's leading market position and efforts to shift towards a franchising model. As such, longer-term outperformance remains warranted
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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