On Monday, Stifel, a financial services firm, raised its price target for Hyatt Hotels Corporation (NYSE:H) shares to $151 from $141, while maintaining a Hold rating on the stock. The adjustment followed Hyatt Hotels' announcement on Friday post-market close regarding the sale of the Hyatt Regency Orlando.
The property was acquired by RIDA Development Corporation in partnership with an Ares Management (NYSE:ARES) Real Estate fund for $1.07 billion, a transaction valued at 13.3 times EBITDA.
The Hyatt Regency Orlando consists of 1,641 rooms and spans 45 acres of land. Despite the sale, Hyatt Hotels will continue to manage the property under a long-term management agreement, retaining the Hyatt Regency branding. Hyatt will hold $265 million in non-controlling preferred equity and is also providing $50 million in seller financing for the adjacent 45-acre parcel.
The buyers have plans to expand the existing facilities, with intentions to seek approvals for the construction of the Grand Hyatt Orlando. This new development is set to be a multi-phase project, ultimately resulting in a complex that will offer more than 4,000 rooms upon full completion.
The sale of the Hyatt Regency Orlando marks the completion of Hyatt Hotels' disposition program. This strategic move allows the company to optimize its portfolio and focus on its core hotel management and branding operations.
The transaction is significant for Hyatt Hotels as it not only generates substantial capital from the sale but also ensures ongoing involvement in managing one of the largest hotel complexes in Orlando. The planned development of the Grand Hyatt Orlando is expected to further enhance the company's presence in a key tourist destination.
In other recent news, Hyatt Hotels Corporation has made significant strides in its financial performance and strategic growth. The company recently completed the sale of the Hyatt Regency Orlando, along with an adjacent land parcel, generating approximately $1.07 billion in gross proceeds.
This sale also included a long-term management agreement to continue operating under the Hyatt Regency brand. The deal is expected to shift Hyatt's EBITDA mix towards asset-light fees, which is projected to account for approximately 85% of its EBITDA.
Furthermore, Hyatt has updated its full-year 2024 outlook, with an adjusted EBITDA forecast that remains consistent with the guidance provided earlier, except for a $35 million reduction due to the sold hotel's EBITDA. Following the sale, Hyatt has increased its capital return to shareholders by $400 million to $1.25 billion, hinting at potential future brand acquisitions.
In terms of personnel changes, Hyatt recently appointed Kinsey Wolf as its new Senior Vice President, Controller, and Chief Accounting Officer. Analyst firms JPMorgan (NYSE:JPM) and Truist Securities have also updated their price targets for Hyatt, with JPMorgan raising it to $164 from $162, and Truist Securities lowering it to $164 from $168, both maintaining positive ratings on the stock. These recent developments reflect Hyatt's ongoing efforts to enhance its financial performance and strategic growth.
InvestingPro Insights
Following the recent strategic moves by Hyatt Hotels Corporation (NYSE:H), including the sale of the Hyatt Regency Orlando, Stifel has raised its price target for the company's shares. Investors considering Hyatt's stock may find the following insights from InvestingPro valuable in assessing the company's financial health and market position:
- With a market capitalization of $14.71 billion and a P/E ratio standing at 15.45, Hyatt Hotels demonstrates a solid market presence and a valuation that might appeal to value-oriented investors. Notably, the adjusted P/E ratio for the last twelve months as of Q2 2024 is higher at 37.01, which could indicate expectations of future earnings growth.
- The company has been recognized for its impressive gross profit margins, which stood at 68.06% for the same period, emphasizing its efficiency in controlling costs relative to revenue.
- Hyatt's share performance has shown significant returns, with a one-week total price return of 9.78%, reflecting positive short-term investor sentiment.
For those interested in a deeper analysis, InvestingPro offers additional tips on Hyatt Hotels, including insights into management's share buyback strategy and the company's debt levels. There are several more InvestingPro Tips available, which can be accessed through their dedicated page for Hyatt Hotels at Investing.com/pro/H.
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