Chicago-based Hyatt Hotels Corporation (H) recently announced that one of its affiliates has signed a management deal with OJSC Nash Dom-Primorye for the opening of two new hotels in Russia. Financial terms of the deal were not disclosed.
Both the new hotels namely Hyatt Regency Vladivostok, Golden Horn and Hyatt Vladivostok, Burny are opening in Vladivostok, Russia. Vladivostok was restricted to only Russian nationals till 1992 and outsider entry was forbidden, but with the recent tie-ups between many national and international companies, the city has emerged as a key driver of growth in the country.
The construction of the two new hotels has already started and the company targets to open both the properties before the Asia-Pacific Economic Cooperation (APEC) Summit in fall 2012. The state owned company OJSC Nash Dom is primarily accountable for this project. The project is expected to create 700 new jobs.
The new hotel Golden Horn will feature 217 guest rooms and suites along with other amenities like conference facilities, food and beverage outlet, a spa, banqueting and health club. The other hotel Burny will include 218 guest rooms and all the additional facilities to provide best-in-class customer experience. Both the hotels are conveniently located with the guests having easy access to important places.
The two new hotels will mark the third and fourth Hyatt properties in Russia, respectively, and also the first international hotel brand in Vladivostok. The company already boasts a presence in Moscow and Yekaterinburg. Hyatt also has a hotel under construction in Sochi, which is slated to open in 2013.
The company is excited as a major event like APEC Summit will be held in the new hotels. In this event all the government leaders will assemble to discuss the growth prospects and investments to be made in the Asia-Pacific region. The meetings will be held in Golden Horn while the guests will stay in Burny.
Given its strategic timing, we believe these new hotels will enhance the hotelier’s expansion policy. The company is poised to benefit from the increase in demand for hotels, particularly in the international market, where the pace of economic recovery is particularly fast. The company currently operates 140 hotels globally and has more than 25 hotels in the pipeline for construction in China, India, Latin America, the United States, Saudi Arabia, and Vietnam.
Other hoteliers like Marriott International Inc (MAR) andStarwood Hotels & Resorts Worldwide Inc (HOT) are also expanding their footprint in the Asia-Pacific region.
Hyatt currently retains a Zacks #2 Rank (short-term Buy rating). We are also maintaining our long-term Neutral recommendation on the stock.
