HomeMarket NewsExpanding Horizons: Hilton to Acquire Graduate Hotels in $210 Million Deal

Expanding Horizons: Hilton to Acquire Graduate Hotels in $210 Million Deal

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The Acquisition Deal Unveiled

In a bold move, Hilton Worldwide Holdings Inc. has entered into an agreement to acquire the renowned Graduate Hotels brand from Adventurous Journeys (AJ) Capital Partners for a hefty sum of $210 million.

This strategic partnership, still subject to customary closing conditions including regulatory review and approval from Hart-Scott-Rodino, is anticipated to conclude in the second quarter of 2024.

With optimism brimming, Hilton views the inclusion of Graduate Hotels as a golden ticket to enhance its vast brand portfolio, promising travelers a bespoke hospitality experience in their cherished university towns. This addition, coupled with Hilton’s recent collaborations with Small Luxury Hotels of the World and AutoCamp, sets a solid foundation for future growth and diversification.

Hilton’s Strategic Expansion

Hilton stands at the cusp of a strategic expansion drive, aiming to widen its market presence and enrich its product offerings through a mix of innovation, new unit growth, and strategic alliances. Geographically diverse, Hilton’s broad footprint spans across the globe, cushioning the impact of market fluctuations, with over half of its upcoming projects located outside the United States.

Embracing a unit growth strategy with gusto, in 2023 alone, Hilton unveiled 395 new hotels, adding close to 63,000 rooms – marking an 8.6% year-over-year surge. The company’s net unit growth also saw an uptick, reaching a record high, driven by the signing of a whopping 130,000 rooms in 2023.

As of December 31, 2023, Hilton’s development pipeline boasted nearly 3,274 hotels with around 462,400 rooms spread across 118 countries and territories. Eyes set on the horizon, Hilton projects a net unit growth between 5.5% and 6% for the year 2024.

Zacks Investment Research
Image Source: Zacks Investment Research

The shares of this high-flying hospitality juggernaut have soared by 34.9% in the last six months, outperforming the Zacks Hotels and Motels industry’s growth rate of 24.5%.

Exploring Zacks Rank & Key Picks

Hilton currently holds a Zacks Rank #3 (Hold) in the market arena.

Here’s a snapshot of some stellar performers in the Zacks Consumer Discretionary sector:

Hyatt Hotels Corporation is shining bright with a Zacks Rank #1 (Strong Buy). Boasting a trailing four-quarter earnings surprise of an impressive 17.8% on average, the stock has steamed ahead by 46.5% in the past six months. Hyatt’s 2024 sales and earnings per share (EPS) are estimated to witness a healthy increase.

Netflix, Inc. is another star player currently flaunting a Zacks Rank #1. With a trailing four-quarter earnings surprise of 5.4% on average, Netflix has dazzled with a 55.5% surge in stock value over the past six months. The company’s 2024 sales and EPS are also on a growth trajectory.

Adtalem Global Education Inc., a solid contender in the sector, holds a Zacks Rank of 1. The company has recorded a consistent 16.9% trailing four-quarter earnings surprise and is up by a commendable 13.9% in the last six months. Adtalem’s fiscal 2024 sales and EPS are expected to witness steady growth.

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