Here's Why Investors Should Retain Hyatt Stock in Their Portfolio

Hyatt Hotels Corporation H will likely benefit from solid leisure-transient demand and unit expansion efforts. Also, the focus on an asset-light business model bodes well. However, an uncertain macroeconomic environment is a concern.

Let’s delve deeper.

Growth Catalysts

Hyatt has gained momentum, buoyed by strong quarterly performance, solid Revenue Per Available Room (RevPAR) growth and robust development activity. The company continues to benefit from durable demand in group and business travel segments and the success of its asset-light model.

Hyatt's strong RevPAR performance has been a key growth driver. The company reported robust performance in the first quarter of 2025, with RevPAR rising 5.7%, exceeding the high end of its full-year guidance range. The growth was primarily fueled by a strong rebound in business transient and group travel demand. Looking ahead, Hyatt expects stronger RevPAR growth internationally compared to the United States. In the Americas, all-inclusive resort bookings are pacing up 7% for the second quarter. U.S. group bookings remain positive, with pace up 3% for the remainder of 2025 and more than 10% for 2026. Management anticipates the 2025 system-wide RevPAR to rise 1-3% year over year.

Hyatt's World of Hyatt loyalty program continues to fuel engagement and growth. Over 2 million new members joined in the first quarter, bringing the total membership base to approximately 56 million, a 22% year-over-year increase. During the quarter, loyalty room night penetration rose 170 basis points, contributing to stronger direct bookings. The company reported a rise in co-branded credit card spending on a year-over-year basis.

Hyatt continues to expand its presence globally. It reported a strong first quarter on the development front, ending with a pipeline of approximately 138,000 rooms, marking a 7% year-over-year increase. The company achieved net room growth of 10.5%, supported by high-profile additions such as The Venetian Resort Las Vegas, Andaz Doha, Hyatt Regency Bangkok Airport and the first Hyatt Studios property in Mobile, Alabama. Hyatt Studios Mobile Tillmans Corner has shown promising early results, including strong direct bookings and positive feedback from both guests and developers. The company continues to target 6% to 7% net rooms growth in 2025, driven by organic expansion.

Hyatt emphasized the strategic advantages of its asset-light transformation, which represents more than 80% of the company’s earnings, up from around 40% at the time of its IPO in 2009. This shift has enhanced EBITDA stability, with current sensitivity indicating a 1.4% EBITDA change per 1% RevPAR movement, compared to a 2.5% drop during the 2008 crisis under its former structure. The model allows Hyatt to navigate economic volatility while capitalizing on scale and fee-driven expansion.

Concerns

Shares of Hyatt have lost 14% so far this year compared with the industry’s 1.2% decline. The downside can be attributed to an uncertain macroeconomic environment.

Despite a strong start to 2025, Hyatt experienced signs of softening customer behavior, particularly in short-term leisure and business transient bookings. This emerging trend prompted the company to revise its RevPAR expectations for the remainder of the year, signaling caution amid a volatile macroeconomic backdrop.

Hyatt has been encountering travel demand softness in Greater China for some time now. In the first quarter of 2025, RevPAR in the region remained flat year over year as Hyatt lapped a strong performance in the prior year. Although the travel restrictions are easing in the region, the demand trends are still lagging. Limited visibility in this market continues to pose challenges.

H’s Zacks Rank & Key Picks

Hyatt currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Consumer Discretionary sector are Fox Corporation FOX, Laureate Education, Inc. LAUR and Stride, Inc. LRN.
 
Fox currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
 
The company has a trailing four-quarter earnings surprise of 30.9%, on average. The stock has inched up 8% in the year-to-date period. The Zacks Consensus Estimate for Fox’s fiscal 2025 sales and earnings per share (EPS) implies growth of 13.9% and 32.1%, respectively, from the year-ago levels.
 
Laureate Education presently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 56.1%, on average. The stock has moved up 25.8% in the year-to-date period.
 
The Zacks Consensus Estimate for Laureate’s 2025 sales and EPS indicates growth of 0.3% and 23.7%, respectively, from the year-ago period’s levels.
 
Stride currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 94.7%, on average. The stock has gained 38.4% in the year-to-date period.
 
The Zacks Consensus Estimate for Stride’s fiscal 2025 sales and EPS indicates an increase of 16.7% and 51.2%, respectively, from the year-ago levels.

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This article originally published on Zacks Investment Research (zacks.com).

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