Hilton Worldwide Holdings Inc. (HLT) has struck a deal with Adventurous Journeys Capital Partners to purchase the Graduate Hotels brand for a hefty $210 million. This bold move is poised to bolster Hilton’s portfolio and offer travelers top-tier hospitality experiences in their beloved university towns.
The acquisition, pending customary approvals, including the Hart-Scott-Rodino review, is set to be finalized by the second quarter of 2024. The Graduate Hotels brand integration joins Hilton’s recent collaborations with Small Luxury Hotels of the World and AutoCamp, fueling its growth trajectory and enriching its product mix.
Details of the Acquisition
As part of the agreement, Hilton will gain complete ownership of the brand globally, entailing the establishment of franchise agreements for all existing and forthcoming Graduate Hotels properties. Meanwhile, Adventurous Journeys Capital Partners will retain ownership of over 35 operational and pipeline properties under the umbrella of long-term Hilton franchise arrangements.
By late 2024, guests can anticipate booking Graduate Hotels through Hilton channels, unlocking exclusive benefits like flexible payment options, member discounts, complimentary Wi-Fi, and usage of the Hilton Honors mobile app. The Graduate Hotels will also seamlessly integrate into Hilton Honors, the brand’s renowned guest loyalty program.
Hilton’s Strategic Expansion
Eyeing an extensive market outreach and a diverse product assortment, Hilton remains dedicated to enlarging its presence through fresh unit expansions, innovation drives, and strategic affiliations. Its expansive global footprint, spanning beyond the United States, mitigates market-specific volatility risks, with a majority of its pipeline situated internationally.
In 2023, HLT unveiled 395 new hotels, ramping up its room count by almost 63,000, marking an 8.6% surge year-over-year. Impressively, the company achieved a net unit growth of 4.9%, exceeding the previous year’s 4.7%. As of December 31, 2023, Hilton’s development pipeline embraced nearly 3,274 hotels with close to 462,400 rooms across 118 countries and territories. Anticipating a net unit growth of 5.5% to 6% in 2024, Hilton is poised for further expansion and success.
Image Source: Zacks Investment Research
The company’s stock has surged by a remarkable 34.9% over the previous six months, outclassing the Hotels and Motels industry’s growth rate of 24.5%.
Ranking and Recommendations
Presently holding a Zacks Rank #3 (Hold), Hilton stands as a formidable player in the hospitality sector. Noteworthy counterparts from the Consumer Discretionary domain include Hyatt Hotels Corporation (H) and Netflix, Inc. (NFLX), both boasting a Zacks Rank #1 (Strong Buy).
Hyatt Hotels Corporation has exhibited a notable four-quarter earnings surprise of 17.8%, while Netflix, Inc. has seen a 5.4% earnings surprise during the same period. Additionally, Adtalem Global Education Inc., with a Zacks Rank of 1, has recorded an average four-quarter earnings surprise of 16.9%.
These rankings reflect the potential growth and stability in various sectors, underlining the vibrancy and resilience of the economic landscape.
