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Hyatt Hotels: Proving Resilient, But Investors Too Optimistic Right Now

Mar. 03, 2021 9:47 AM ETHyatt Hotels Corporation (H)
Discount Fountain profile picture
Discount Fountain


  • Hyatt Hotels Corporation continued to see a strong drop in revenue and earnings in the most recent earnings quarter compared to the previous year.
  • While the stock is being driven upwards by vaccine optimism, occupancy rates remain significantly below normal levels.
  • While Hyatt stands to benefit from a broader industry recovery, I take the view that the recent rise in the stock price is not sustainable.

In late January, I made the argument that while Hyatt Hotels Corporation (NYSE:H) still has significant risk - like many other companies in the hotel industry - the long-term upside remains favourable.

Central to my argument was the fact that hotel demand as a whole is rebounding comparably well in Greater China, where Hyatt has a growing presence. Moreover, anticipation of a rebound in domestic travel across the Americas this summer is also a reason to be optimistic on the stock.


Since late January, growth in Hyatt's stock price has significantly outpaced that of the S&P 500:

Source: investing.com

While Hyatt certainly stands to benefit from a rebound in travel demand going forward, there is a significant risk that the market may be overly optimistic on the stock - and the spike in price is based largely on anticipation of a fast rebound in travel demand - rather than the company's fundamentals in their own right.

For instance, Hyatt's Fourth Quarter 2020 Results were impressive in some regards - namely that the company still saw 5.2% growth in net rooms in 2020.

While the company maintained a strong liquidity position with cash and cash equivalents of $1,882 million, RevPAR (or revenue per available room) still saw a sharp drop on a three-month and year ended basis:

Source: Hyatt Fourth Quarter 2020 Results

Additionally, while the average daily rate (the average rate paid by a customer per day during their stay) did not fall by as great a margin - this figure did still fall by double-digits on a percentage basis across most segments.

While RevPAR did see a modest improvement from the third quarter of 2020, the environment for hotel demand still remains quite uncertain.

Given these figures, I fail to see justification for the spike in price that we

This article was written by

Discount Fountain profile picture
I am an independent investor with an interest in analyzing stocks across the consumer, finance, telecommunication, and travel sectors. As a data scientist, I also have a great interest in using data tools to better understand a company's financial position.Some examples include:- Aggregating quarterly churn and ARPU data for Deutsche Telekom (DTEGY) and analysing trends over time using SQL: https://seekingalpha.com/article/4516805-deutsche-telekom-growth-potential-remains- Building a Monte Carlo simulation in Python to analyze loss ratios for Zurich Insurance Group (ZURVY): https://seekingalpha.com/article/4459821-zurich-insurance-stock-solid-insurance-company-still-faces-risks- Examining ADR and RevPAR trends by brand for Hilton Worldwide Holdings (HLT) using SQL: https://seekingalpha.com/article/4517248-hilton-worldwide-holdings-an-analysis-of-adr-and-revpar-trendsDisclaimer: All of the author's articles are written on an "as is" basis and without warranty, with no guarantee of accuracy or completeness. They represent the author's opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions. The author disclaims all liability for any actions taken based on the information contained in any articles published.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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