Hyatt Hotels Corporation H announced the expansion of its loyalty program, World of Hyatt, to the leading provider of home service accommodation, known as Oasis. Guests opting for the home sharing space with Oasis can earn and redeem Hyatt’s loyalty points.
Oasis home rentals belong to The Unbound Collection by Hyatt brand, especially designed for customers who demand home stays with luxury hotel amenities. Under the World of Hyatt loyalty program, members would be rewarded with 5 Base Points per dollar spent on Oasis nights and are allowedto redeem 15,000 points for a $200 credit toward an Oasis stay. Elite members can earn bonus points and are given late check-out options.
Notably, Oasis’s operations across the globe expand Hyatt’s footprint in untapped markets like Barcelona, Ibiza, Punta del Este (Uruguay) and Trancoso (Brazil). The above move, thus, underscores Hyatt’s relentless expansion strategies to strengthen its brand position globally. It also indicates the company’s commitment toward devising ways to enhance guest experience and raise occupancy.
We observe that Hyatt shares have rallied 45.5% over the past six months, outperforming the industry’s 39.2% growth.
Let us discuss the rationale behind Hyatt’s expansion strategies, enhancementof World of Hyatt and its prospects.
International Expansion to Counter Competition
The strategy is in-line with Hyatt’s consistent efforts to expand presence worldwide and capitalize on the demand for hotels in relatively untapped international markets. In fact, the company also has expansion plans for Europe, Asia-Pacific, Africa, Middle East and Latin America.
International expansion should help the company increase its market share, thus boosting its business. We believe that the strategy is also part of Hyatt’s plan to leapfrog competitors like Marriott MAR, Wyndham WYN and Hilton HLT in the race to expand in untapped markets.
Loyalty Program Eyes at Top-Line Growth
Successful innovation has been a trademark of Hyatt, with a commitment to customer-friendly services in both the large-scale convention and smaller leisure markets. By expansion of its loyalty program beyond traditional hotel stays, Hyatt is trying to facilitate greater guest engagement in home spaces that would eventually raise occupancy.
The company has been devising newer ways to enhance its guest loyalty program. In fact, it is already witnessing a higher level of guest satisfaction due to the enhancement of World of Hyatt. As of Dec 31, 2017, the loyalty program had over 10 million active members. During 2017, approximately 30% of total system-wide room nights were favored by the program.
Hyatt believes that enhanced guest experience would drive occupancy, which in turn would favor its top line. By building a substantial demand from offering select services to guests and expanding units, the company is trying to facilitate revenue per available room (RevPAR) growth. In fact, for 2018, the company expects to grow units, on a net room basis, by roughly 6% to 6.5%, reflecting 60 new hotel openings.
Zacks Rank
Hyatt carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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