Hyatt Expands in Malaysia

Construction News

Hyatt Hotels Corporation (H – Snapshot Report) recently announced that one of its affiliates has signed a contract with Bahagia Investment Corporation (Malaysia) Sdn Bhd for the operation of Grand Hyatt Kuala Lumpur.  Financial terms of the deal were not disclosed.

Bahagia Investment, a property investment company, is constructing a 42-storey mixed development project in Kuala Lumpur and the Grand Hyatt hotel will be occupying floors 17 to 39 of the complex. Hyatt will be looking after the hotel and service apartments, whereas the office space will be managed by Bahagia Investment.

This new hotel in Malaysia will feature 412 guest rooms along with other amenities and is expected to open in 2012. This will be the third Hyatt property in Malaysia.

Malaysia is one of the fastest growing countries in Asia and is a very popular tourist destination. The number of tourists visiting Malaysia is seeing a rising trend. In 2010, 24.5 million foreign tourists visited the country.

The new property will open in Kuala Lumpur, the capital and the largest city of Malaysia and a tourist hub for both business and leisure. Given its strategic location, we believe this new hotel will be a milestone in the hotelier’s expansion policy in the rapidly emerging Southeast Asian market.

The company is poised to benefit from the increase in demand for hotels, particularly in the Asia-Pacific region, where the pace of economic recovery is particularly fast. The company currently operates 51 hotels in the Asia-Pacific region. Hyatt along with its other brands opened 30 new properties in 2010 and is set to operate an additional 140 properties. Other hoteliers like Marriott International Inc (MARAnalyst Report) and Starwood Hotels & Resorts Worldwide Inc (HOTAnalyst Report) are also expanding their footprint in the Asia-Pacific region.

Grand Hyatt currently operates 16 hotels situated in key locations like Bali, Singapore, Bangkok etc.  Including the new hotel, the brand also has 12 other properties in the pipeline for construction around the world.

Hyatt currently retains a Zacks #3 Rank (short-term Hold rating). We are also maintaining our long-term Neutral recommendation on the stock.


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