What happened
Week to date, shares of Hyatt Hotels (NYSE: H) were down 9% as of 11:05 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
The stock fell following the company's second-quarter earnings report. While revenue came in above analysts' estimates, the company reported adjusted earnings per share that fell short of expectations.
So what
It's hard to fault the company for a miss on the bottom line. Hyatt continues to enjoy a strong recovery in the travel industry. Comparable systemwide revenue per available room (RevPAR) increased by 15% year over year, with comparable owned and leased hotels' RevPAR up 10%.
The stock was just recently touching all-time highs as the company hit new records in quarterly revenue this year. The earnings miss might have been an excuse for short-term traders to take some profit. Long-term investors have more growth to look forward to from Hyatt, considering the company's momentum and growth strategy.
Management noted that looking ahead to 2024, booking trends are favorable. Average rates and room nights are pacing up about 5% in 2024 right now. The company expects to report RevPAR growth between 3% and 7% through 2025.
Now what
Hyatt is investing in the future, with 119,000 new rooms in the pipeline, representing about 40% of the company's existing capacity. Management is targeting operating more than 1,500 hotels by 2025, up from more than 1,250 hotels in June. That should translate to higher revenue, free cash flow, and positive returns for shareholders.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool recommends Hyatt Hotels. The Motley Fool has a disclosure policy.
