Hospitality industry is broad and has numerous sources of revenue; one extensive part of this sector is hotels. One of the top rated hotel chains worldwide is Hyatt Hotel, which had encountered a recent increase of revenue due to booming demand to leisure and travel sector. As reported by this chain and others, the main factor for the noticeable increase in profits and revenues had been due to the revenue gained per available room in U.S and also abroad.
Hyatt had been considering and implementing a growth strategy of internal growth opening more branches abroad and minimizing the risk of expanding externally. However, this organic growth would take more time than acquisitions. In the case of Hyatt’s expansion, it is opening 15 hotels most of which will be in North America. In addition, in the quarter of this year the hotel chain in Chicago mentioned a net income increase and a share increase from 14 cents a share to 22 cents a share, meaning that more shareholders will be encouraged to invest their money in the chain considering the increase in earnings and expansion which satisfy costumers.
Another contributor to the increased revenue is the company’s purchase of 3 hotels in California and selling 8 hotels to a joint venture in which it holds 40% share. This acquisition would allow Hyatt to benefit by spreading the risks of failure, also an increase in revenue would follow as it is eliminating a competitor and would also be raising awareness to the company.Hyatt would be working on the basis of synergy where the benefits of the acquisition would be far more profitable than the benefits gained by each firm on its own. The CEO states: “The acquisition will help the company expand its select service presence and heighten awareness about the brand.”
Hyatt experienced a huge inflow of money improving its financial position and attracting shareholders due to increased demand and the strategy of expanding internally and externally.
http://www.foxbusiness.com/industries/2011/08/02/hyatt-hotels-2q-profit-grows-on-revpar/
It is interesting that Hyatt would be opening 15 hotels in the North American region especially due to the current economic situation. This shows their future thinking in the economic situation for the US and what they believe will be happening in the future. It is especially interesting to note the 3 pick ups in California. They must obviously see great potential in that area for their brand.
ReplyDelete-Domenick Cocchiara