Source: Hyatt

Hyatt Hotels (H 2.77%) announced better-than-expected earnings for the fourth quarter of 2013 on Friday, and the stock jumped by more than 7% in response, reaching all time highs near $52.85 per share. Should you stay in this hotel for more growth or is it time to pack your luggage and leave?

Small and cozy
Revenues during the quarter grew 9.1% to $1.09 billion versus the $1.08 billion forecast on average by Wall Street analysts. Comparable owned and leased hotel revenue per available room increased 6.2% versus the same quarter in the previous year on the back of strong customer demand.

Occupancy rates increased to 72.5% versus 70.7% in the fourth quarter of 2012 and average daily rates rose 4.7%. Adjusted net income was $0.32 per share during the quarter, a big increase of 60% versus the same quarter in the prior year, and substantially higher than the $0.2 per share estimated on average by analysts.

As of the end of 2013 the company owned 548 properties and more than 147,000 rooms. This means that Hyatt is considerably smaller than other players in the industry, which has some disadvantages when it comes to scale and geographical reach, but this smaller size also provides more room for growth in the years ahead.

The company is not wasting any time at all when it comes to expansion: Hyatt opened 16 hotels during the quarter, for a total of 51 openings during the year. The company expanded its base of executed contracts for new hotels to 240, or 54,000 rooms, the largest in the company´s history. Global expansion, with a special focus on high-growth countries like China and India, is a top priority for Hyatt in the coming years.

CEO Mark Hoplamazian has built a strong culture of innovation and a sense of purpose on the company´s employees, and that seems to be reflecting positively on service quality and customer demand. In his own words:

We have a very unique culture and strong emotional ties among our colleagues, which I feel we can translate into making a difference. It is about how we interact with one another as well as our guests and improve people's lives. 

A small fish in a big pond
(HLT 0.27%) is an industry giant operating more than 4,000 hotels, resorts, and timeshare properties and over 672,000 rooms in 90 countries and territories. The company was taken private via a leveraged buyout by The Blackstone Group in 2007, and it will announce its first earnings report since coming back to the public market on Feb. 27.

Hilton has made material improvements in terms of reducing debt and building financial strength over the last years, and the company is now focusing on international expansion. The company has a huge pipeline of 186,000 rooms, 60% of them in international locations, so Hilton is betting heavily on international growth in the coming years.

Marriott (MAR 0.05%) owns more than 3,900 properties in 72 countries and territories, and the company is also accelerating its growth plans lately. Marriott increased its total development pipeline by more than 30% in 2013, and it now has more than 195,000 rooms under development across five continents. The Asia Pacific region will be a key growth driver for Marriott in the coming years as the company expects to have 330 hotels with more than 96,000 rooms across 16 countries in the region by 2016.

Starwood Hotels & Resorts (NYSE: HOT) is smaller than Hilton or Marriott, but still considerably bigger that Hyatt with nearly 1,200 properties in 100 countries. The company announced earnings for the fourth quarter of 2013 on Thursday, and it delivered a 5.3% increase in revenues per available room during the quarter.

Financial performance was a bit disappointing, though, as both revenues and forward guidance came in below analysts' estimates. But Starwood is still planning to continue expanding in the coming years: The company has nearly 450 hotels in the active pipeline representing approximately 105,000 rooms.

Hyatt is clearly not the only one betting on international expansion, so competitive pressure is a risk to watch. On the other hand, if bigger players still have room for growth, Hyatt could have plenty of opportunities for expansion in the coming years.

Bottom line
Judging by recent financial performance and customer demand, Hyatt is doing the right thing by betting on growth. The company has considerable room for expansion before reaching the same level of market penetration as bigger competitors like Hilton, Marriott, and Starwood. So, make yourself comfortable, because this journey is far from over.