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Since the end of the pandemic, the hospitality market has exploded. Traveling and tourism are at an all-time high, and many in the travel industry are seeing excellent returns.
One of these winners is Hilton and its growing brands of hotels. The company’s stock has outperformed major US indices and is trading near its all-time high. Hilton may not be a high-flying AI or tech stock, but its returns are worth noticing if another COVID pandemic doesn’t come our way. Here is everything you need to know about Hilton and its competitors trading on the US stock market.
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Hilton Stock (HLT) Introduction
Hilton Hotels Corporation was founded by Conrad Hilton in 1919. The company began with the purchase of the Mobley Hotel in Cisco, Texas. The brand quickly expanded, and by 1943, it had become the first coast-to-coast hotel chain in the US. In 1946, Hilton became the first hotel company listed on the NYSE.
Several strategic acquisitions and innovations marked Hilton’s growth, such as introducing TVs in guest rooms and developing the Hilton Honours loyalty program.
In 1949, the company opened its first international hotel in Puerto Rico. By the early 2000s, Hilton had grown into one of the world’s largest and most recognizable hotel chains, with over 2800 hotels across 76 countries.
However, despite its success, Hilton faced challenges related to sustaining growth rates due to the cyclicality of the lodging industry. The company became an attractive target for an acquisition.
Blackstone (NYSE: BX)
In 2007, global investment firm Blackstone announced its intention to acquire Hilton Hotels Corporation in an all-cash transaction valued at approximately $26B. Hilton became a private company and was delisted from the NYSE.
This acquisition was one of the largest private equity deals at the time and marked a significant milestone in the hospitality industry’s trend toward consolidation.
Blackstone viewed Hilton as a valuable addition to its existing portfolio of hotels and resorts. This transformed Hilton into a leading performer in the industry thanks to capital injections into the brand, which quickly expanded its global footprint.
Hilton Stock (NYSE: HLT)
In December 2013, Hilton returned to the public markets with a massive IPO. It raised $2.35B, which became the largest ever for a hotel company. Since its 2013 IPO, Hilton has experienced substantial growth.
The company has nearly doubled its global property and room count, expanded its brand portfolio, and increased its Hilton Honors loyalty program membership from 39M to over 173M members.
Performance and Prospects
Today, Hilton has a diverse portfolio of hotel brands that cater to various market segments, ranging from luxury to budget accommodations. The company operates 24 brands and over 8000 properties across 120 countries. Here’s a breakdown:
- Luxury: Waldorf Astoria, LXR, Conrad, NoMad and Signia
- Lifestyle: Canopy, Graduate, Tempo, Motto, Curio and Tapestry
- Full-service: Hilton, DoubleTree and Embassy Suites
- Focused service: Hilton Garden Inn, Hampton, Tru and Spark
- All-suited: Homewood Suites and Home2 Suites
- Vacation: Hilton Grand Vacations and Hilton Club
- Emerging: LivSmart and AutoCamp
Thanks to these diverse offerings, Hilton has performed very well financially on the stock market. Since its IPO in 2013, the stock has been up 378% (as of August 2024) thanks to strong demand, improvements in group business, and digital initiatives.
During that time, Hilton’s stock has outperformed the DJIA (185%) and the S&P (210%). The company expects to maintain its growth by expanding internationally in untapped markets. For the moment, there don’t seem to be any significant struggles in its way, as long as there isn’t another global pandemic.
In 2023, its annual revenue surpassed $10B for the first time since 2014. Can it keep the momentum going, or will it falter due to increasing competition?
Hilton Stock Competitors
Hilton operates in a competitive industry that has been consolidating in the last decade. Many hotel chains belong to one of these groups, and they are quickly expanding. Here are some of Hilton stock’s major competitors trading on the stock market.
1. Marriott International (NASDAQ: MAR)
Marriott has been around since 1927, when it opened an A&W Root Beer franchise in Washington, D.C. The company only opened its first hotel in 1957, which started Marriott’s journey in the lodging sector.
Today, Marriott International is the largest hotel chain in the world, with over 30 brands under its name and 8900 properties across 141 countries.
In 1953, Marriott went public, which helped its growth and international expansion. In 1993, Marriott International was spun off from the original Marriott Corporation, and its shares began trading separately.
Thanks to its organic growth and strategic acquisitions, Marriott became a well-known name globally for travelers and tourists.
As for the stock, it has been performing well (up 13% in 1 year and 80% in 5 years) but not as good as Hilton. Marriott has grown below Hilton’s projections by just under 6% YoY.
However, Marriott’s yearly dividend yield (1.12%) is better than Hilton’s (0.28%). Nonetheless, both stocks are thriving and will continue if we have favorable economic conditions.
2. Hyatt Hotels (NYSE: H)
Next on the list of Hilton stock competitors is Hyatt Hotels. Their story began in 1957 near LA International Airport. After a series of acquisitions, the brand began to expand and develop its business.
In 2009, Hyatt Hotels went public and raised $1.15B. Like the other hotel chains on this list, Hyatt is quickly expanding its local and global presence, doubling its luxury rooms and quadrupling its World of Hyatt loyalty program members (46M as of Q1 2024).
What makes Hyatt so successful? The brand has been targeting high-end guests, growing new and existing markets, enhancing its loyalty program, and focusing on lifestyle and resort segments.
Since the pandemic, it has improved its profitability ratios and has been named one of the best American companies to work for. Last year, the brand recorded record revenue ($6.67B), likely increasing in 2024. Keep an eye on Hyatt if its European and Asian expansion plans are fruitful.
3. Intercontinental Hotels (NYSE: IHG)
Intercontinental started as a brewing company in 1777 (Bass) but changed its focus to hospitality in 1988 when it acquired Holiday Inn International. After a few more acquisitions, Bass PLC separated its brewing and pub operations from its hotel and soft drinks businesses.
This led to Six Continents PLC, which housed the hotel operations. Later 2003, Six Continents split again and gave birth to InterContinental Hotels Group PLC, which focused on the hotel business.
During the 2010s, IHG completed numerous acquisitions and consolidated its business, similar to the other hotel chains mentioned. As of 2024, it operates over 6000 hotels across 100 countries.
It currently has 2000 more hotels in its pipeline, and almost half are under construction. To lower its capital requirements, IHG focuses on franchising and managing hotels rather than owning them outright, similar to restaurants.
Like its peers, IHG has seen strong revenue growth since the pandemic. Last year, its revenue nearly broke its 2019 record ($4.6B). The company’s stock has performed well in the last five years and will likely break new highs if it meets expectations for the upcoming quarters.
4. Wyndham Hotels & Resorts (NYSE: WH)
Last on this list of Hilton stock competitors is Wyndham Hostels & Resorts. The brand was created after mergers, acquisitions, and spin-offs. In short, Blackstone sold Wyndham, which later in 2018 spun off from its parent company and began trading as Wyndham Hotels & Resorts.
It’s hard to keep track of all the deals with this one, so I’ll spare you. Today, the company has a portfolio of 25 hotel brands (Days Inn, Howard Johnson’s, Ramada, Super 8, Travelodge and more). Wyndham has over 9000 hotels across 95 countries.
Most of these hotels are in the US and aren’t as fancy as the ones mentioned above. The company is strong in the economy and midscale segments, but it has also expanded into other market tiers, including luxury with its Registry Collection Hotels.
Despite the lack of luxury, Wyndham has reported 12 consecutive quarters of growth. The company is doing very well thanks to brand development and a focus on organic growth. Its numbers aren’t as appealing, but the stock is worth watching.
Final Thoughts: Hilton Stock
Big hotel chains have grown their businesses thanks to mergers and acquisitions. They can diversify their portfolio and capture market share in various hospitality business segments by consolidating.
This is exactly what Hilton, Marriott, Hayat, and others have been doing. They are far from monopolies because the competition is fierce, but their profits are growing, and their high-end customers are loyal.
All these brands are here to stay and are quickly developing their reach in Europe and Asia. Their pipelines are busy. Hilton stock has even outperformed major US stock indices since its IPO. Keep an eye on this segment of the economy!
If you want to learn more about profiting from the stock market, head to our free library of educational courses. We have something for everyone, including trading options for those with small accounts.
Frequently Asked Questions
Hilton operates 24 brands and over 8000 properties across 120 countries.
Hilton is profitable. Its net income was $422M in Q2 2024, a 2.17% YoY increase.
In 2007, Blackstone purchased Hilton for $26B. Today, the company has a market cap of $53.5B.
