Why the Sydney Airport (ASX:SYD) share price will be one to watch

Recent developments have put the company into the spotlight.

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The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be in focus when trading resumes this morning. That’s after the Australian Financial Review (AFR) reported the airport will start work on a new hotel precinct in 2022.

At close of trade yesterday, shares in the company were trading for $7.69 – down 1.28%. The S&P/ASX 200 Index (ASX: XJO) ended yesterday 0.23% lower.

Let’s take a closer look at today’s news.

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As the AFR reported, Sydney Airport has received federal government approval to build a 4- to 5-star hotel next to the T3 domestic terminal. The federal government has responsibility for all of Australia’s airports.

The building is reported to be nine storeys with 321 rooms. It will contain two hotel brands and be located adjacent to the Ibis Budget and Mantra hotels. The hope is that a full retail and hospitality precinct can be established in the area by 2024.

Sydney Airport has not disclosed the two brands that will operate the hotels, according to the AFR. Let’s see what this means for the Sydney Airport share price.

Recent Sydney Airport share price news

Sydney Airport made the news when it received, and then rejected, an unsolicited takeover bid of $8.25 per share. Since then, the company has been under pressure to prove to investors that it can unlock value above the offer price by the consortium of investors.

The Motley Fool has previously reported expert suggestions that the Sydney Airport share price will not hit that $8.25 figure for a while.

An analyst at Morgans said that until international travel is up and running again, Sydney Airport’s value will take some time to appreciate substantially.

Of course, international travel has been shunted by the COVID-19 pandemic. A pick-up in domestic travel, plus trans-Tasman travel to New Zealand, has been devastated by a recent outbreak in the harbour city. With every state shutting their borders to New South Wales, and with this likely to continue for some time, it may be a rough few months for Sydney Airport.

The company will release its full-year results on Friday 20 August.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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