Justin Sullivan
Hilton Worldwide (NYSE:HLT) is in talks to buy the Graduate Hotels brand, according to a Bloomberg report. Sources indicated that the deal for the brand would not include the real estate assets.
Graduate Hotels is a collection of hotels that are located close to or in college towns, including near the high-profile University of Georgia, Arizona State, and Stanford campuses. The hospitality company was launched in 2014 by Nashville-based real estate company AJ Capital Partners. Graduate Hotels has more than 30 locations, with most located in the U.S. and a few in the UK.
A M&A play would be a diversion for Hilton (HLT), which is noted to have typically grown internally with new brands as opposed to acquiring existing chains such as Marriott International (MAR) and Hyatt Hotels (H) have done in recent years.
Shares of Hilton Worldwide (HLT) were down 0.85% in late afternoon trading. Early on Monday, Evercore ISI warned that the bull case for hotel stocks may already be priced in. The firm lowered its rating on both Hilton Worldwide Holdings (HLT) and Hyatt Hotels Corporation (H) to In-line ratings from Outperform to factor in the notable share price rallies in 2023. Analyst Duane Pfenningwerth said the revised outlook for the hotel sector is not a call on the quarter as the firm generally expect upside to existing guidance. However, little upside room is seen for meaningful share price returns even if the reports and guidance come in strong.