Hilton Worldwide Holdings Inc. HLT recently announced that its Home2 Suites by Hilton brand has opened Home2 Suites by Hilton Miramar Ft. Lauderdale.  This is the 200th property by Home2 Suites, which the company had planned to open by the end of 2017.

Notably, in itsRoad to Home200, held in September, Home2 Suites had invited hotel journalists to predict which out of 385 pending locations would mark its 200th hotel. Given the rapid pace of launching new hotels, there were more than 60 locations that had chances of becoming the 200thproperty.

We observe that the stock has rallied 28.8% in the last six months, significantly outperforming the S&P 500’s gain of 11%.

Brand Portfolio Expansion as Key Growth Driver

The move appears to be a part of Hilton’s efforts to gain traction in urban and suburban locations. It is expected to significantly boost the company’s brand portfolio, which already consists of 14 world-class brands, comprising more than 5,100 properties with nearly 838,000 rooms in 103 countries and territories. Moreover, the portfolio continues to spread in the domestic market.

The company eyes net unit growth of approximately 6.5% for 2017 and have more rooms under construction than any other hotel chain.

Home2 Suites has an innovative and flexible construction model, which has already helped the brand enter major urban centers such as Los Angeles and Downtown Columbus, Ohio. Hilton, by capitalizing on the multi-brand building model, is also expanding its urban footprint in Chicago and downtown Columbia, which have high barriers to entry.

Focus on Enhancing Customer Loyalty

The new hotel also seems to be a part of Hilton’s bid to enhance customer loyalty, more so because Home2 Suites is a part of Hilton Honors, one of the largest loyalty programs. With about 70 million members, this network has emerged a highly valuable asset for the company. In fact, about 57% of all occupancy per night takes place through this membership program. The company is focused on making multiple enhancements to its loyalty program in order to make it more customer-centric, driving incremental value for guests and the overall system.

Last Words

Relentless expansion and strategic vision to fortify its presence globally as well as domestically, makes Home2 Suites a significant brand for Hilton, which is continuously gaining momentum.

Additionally, Hilton maintains strong fundamentals and cash flow position, which are beneficial to its shareholders. In order to return more to shareholders, the company has opted for a more capital-light operating business model backed by the spin-off of a portfolio of hotels and resorts, as well as its timeshare business.

Zacks Rank & Stocks to Consider

Hilton currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Consumer Discretionary sectorare Marriott International, Inc. MAR, Choice Hotels International, Inc. CHH and Clarus Corporation CLAR. While Clarus sports a Zacks Rank #1 (Strong Buy), Choice Hotels and Marriott carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Current-year earnings for Clarus, Choice Hotels and Marriott are expected to improve 294.4%, 16% and 11%, respectively.

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