Hyatt Hotels Corporation (H) announced management contracts for nine new hotels in India. Financial terms of the deal were not disclosed. This would bring the total number of properties now under construction or development in India to 38.
The agreements are for three Hyatt brands: a Grand Hyatt hotel in Noida; Hyatt Regency hotels in Jaipur, Surat, Ghazibad, Chandigarh, Lucknow and Guwahati; and Hyatt Place hotels in Bangalore Devanhalli and Mumbai Seepz. Added to these, Hyatt Regency Chennai and Grand Hyatt Goa are slated for launch later this year.
The demand for hotels is greater in the international market than in the U.S., particularly in the Asia-Pacific region, where the pace of economic recovery is particularly fast. Apart from the Chinese market, hoteliers are expecting India to offer significant possibilities for growth. In the Indian market, demand for hotels considerably outpaces the supply. Additionally, India is expected to experience a meaningful increase in gross domestic product within the next few years. Thus, we expect Hyatt to benefit considerably from this strategic expansion, going forward.
Hyatt’s emerged in India nearly 30 years back. Since then, the company has focused on driving brand preference by providing full portfolio of brands and extensive service in Indian large as well as mid-sized markets.
However, the company faces stiff competition in the India market from major hoteliers like Wyndham Worldwide Corporation (WYN), Marriott International Inc. (MAR) and Starwood Hotels & Resorts Worldwide Inc. (HOT) all of which are on track to beef up their Indian portfolios. Marriott plans to open 100 hotels over the next five years in India while Starwood expects a 60% increase in its Indian portfolio by 2013.
Hyatt currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on the stock.
HYATT HOTELS CP (H): Free Stock Analysis Report
STARWOOD HOTELS (HOT): Free Stock Analysis Report
MARRIOTT INTL-A (MAR): Free Stock Analysis Report
WYNDHAM WORLDWD (WYN): Free Stock Analysis Report
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