Hilton Worldwide Holdings Inc. HLT heavily relies on continual expansion to diversify its revenue stream and strengthen its brand portfolio. To this end, the company recently announced the opening of Hilton Garden Inn Nujiang in Yunnan province. The property is owned by Nujiang Zhengge Hotel Management Co., Ltd, and managed by Hilton. Situated in a convenient location, Hilton Garden Inn Nujiang is the only international hotel in Nujiang.
The move underscores Hilton's efforts to expand into international markets and strengthen its brand name. Recently, the company also announced the opening of DoubleTree by Hilton Huidong Resort in Huizhou.
Although Hilton has expanded in China, Latin America and Europe, it continues to face competition from large hotel chains like Marriott MAR and Hyatt H as well as smaller independent local hospitality providers like Choice Hotels CHH.
In a year’s time, shares of Hilton have lost 11.6%, comparing favorably with the industry’s 27.1% decline.
Unit Growth — A Positive
In a bid to maintain its position as the fastest-growing global hospitality company, Hilton is continuing to drive unit growth. During the third quarter, Hilton opened 113 hotels, taking the room count to 16,100. The company achieved net unit growth of 14,800 rooms, indicating a 24% increase from the prior-year quarter. For 2018, it is supposed to have achieved approximately 6.5% net unit growth. It also continues to have more rooms under construction in Europe, the Middle East and the Asia Pacific compared with any other hotel chain. The company expects greater international expansion in 2019.
Loyalty Program in Place
Hilton Garden Inn Nujiang is part of Hilton’s preeminent loyalty program, Hilton Honors. With about 82 million members, this network created an extremely valuable asset for the company. In 2017, the company added over 11 million members to the program. Further, in the third quarter of 2018, more than 3.5 million members were added to Hilton Honors.
In the meantime, innovations such as the Hilton Honors app continue to drive growth. In addition to being the company’s fastest growing and lowest cost distribution channel, this app, launched in December 2017, enables a differentiated customer experience. In fact, the loyalty program increased occupancy in the third quarter to nearly 60%.
Zacks Rank
Hilton currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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