Hilton Worldwide Holdings - not very attractive

Hilton Worldwide Holdings is a market leader supported by a network of brands with a presence throughout the world. "Hilton Honours," the company's loyalty programme, continues to be among the hotel reward programmes with the greatest growth. The business of Hilton is relatively capital-light and benefiting from favourable tailwinds including an increase in hotel guests and user penetration. Hilton has done pretty well on average and their metrics such as Revenue per Available Room, Average Daily Rate and Occupancy Level is higher than the industry average.

Hilton Loyalty Programme is a guest loyalty programme that supports a variety of brands and is free to join. Along with other companies, it has relationships with American Express, airlines, railroads, vehicle rental agencies, Amazon, and Lyft. The programme offers 158 million members personalised marketing, promotions, and unique guest experiences. Members are encouraged to spend more money on Hilton hotels by the loyalty programme. More than 158 million people are members of the programme, which represents a 19% increase in membership from the previous year. Any new hotel operator using one of Hilton's brands can use this programme as a customer base. Customers gain from the programme as well because they may use their points to travel with the company's exclusive partners, spend free nights, and much more. By increasing the benefits and perks, they can drive customer retention and growth, while also boosting their occupancy level.

Now let's talk about the cons of the franchisee business. Most franchisees use a lot of debt to purchase the business, and many may not make it through economic downturns. Hilton's ability to generate income in the long run might be affected if the franchisees default. The hospitality industry is also quite competitive, therefore in order to flourish, one must be in a favourable location with a strong economy and a management team that is experienced in their field. These qualities are difficult to find, and not every hotel can boast having them.

In conclusion, while Hilton has a dominant business model, their valuation is not very attractive after taking into account the risks. Growth is not easy and the risks outweighs the benefits, hence Hilton would not be a decent investment.