Investors should park some of their money in Hyatt Hotels shares, as high-end leisure and a rebound in international travel drive growth, according to Bernstein. Analyst Richard J. Clarke named the hotel chain his top pick for 2023, noting that Hyatt’s strength in luxury stays sets it apart for the biggest revenue acceleration amongst other big hotel groups. The analyst has an outperform rating on Hyatt shares. His price target of $135 suggests that shares could rally more than 21% from Tuesday’s close price. “Hyatt is the most skewed towards luxury in major hotel groups (1/3 rooms, 1/2 revenue), luxury occupancy has lagged other chain scales but is exhibiting the most pricing power, and will see the most recovery this year as international travel normalizes, especially from Asia,” Clarke wrote in a Tuesday note. “Added to that is the highest exposure to the leisure tourists, especially high-end leisure, which gives Hyatt the greatest offset to a potential downturn. These factors give Hyatt the biggest [revenue per available room] acceleration over the next 24 months — a normal driver of Hotel Corp outperformance,” Clarke continued. The firm added that Hyatt has a quarter of its rooms in the Asia-Pacific region, which Bernstein anticipates will help it benefit from China’s reopening and raise its revenue per available room by more than 12%. Clarke also estimates Hyatt will have the fastest growth and largest margin upside among big hotel names over the long term thanks to its prime position in luxury travel and Asia-Pacific region, which are the fastest growing segments. “All of this supports Hyatt’s current 40%-50% valuation gap vs. Marriott and Hilton to narrow,” Clarke said. “In a blue sky scenario, we would argue that Hyatt’s exposure to luxury should deserve a multiple premium even, as we see in the luxury car and goods sectors.” The stock has surged 23% in 2023. —CNBC’s Michael Bloom contributed to this report.
