Hotel News Now is reporting that a leisure-led recovery is underway for Hyatt Hotels and Resorts. Though the company reported a $75 million first-quarter loss, it recorded its highest ADR on record for March and April.
Published by: Sean McCracken/Hotel News Now
Published date: May 2022
Extremely strong bookings at high rates for the company’s resort portfolio are driving a significant business ramp-up at Hyatt Hotels Corp., according to executives.
Speaking during the company’s first quarter earnings call this morning, President and CEO Mark Hoplamazian said the data clearly shows a story of a continued leisure-led recovery with no signs of stopping.
“It’s difficult for me to moderate my enthusiasm because the data is quite clear,” Hoplamazian said when asked by an analyst how much more room there is to grow for Hyatt’s resort portfolio, particularly with high rates at Apple Leisure Group properties. Hyatt acquired the vertically integrated all-inclusive resort platform in 2021.
“The embedded [average daily rate] for the AMResorts business is up 22% over 2019,” he said. “And if you look at the Americas outside of ALG for Hyatt, our leisure-focused business is up 38% in rates for future bookings.”
He noted the company recorded its highest system-wide average daily rate on record in both March and April — at $195 and $199, respectively.
The company has focused more on its resort portfolio, announcing just days ago the launch of the Inclusive Collection, intended to combine the offerings of the company’s nine luxury all-inclusive brands. The company is also integrating loyalty offerings for World of Hyatt and Apple Leisure Group.
Hoplamazian said there is no sign that the high leisure demand and resort demand will crash, but he also realizes the unusually high growth rate can’t continue forever.
“I’m the first person to remind ourselves and others that trees can’t grow to the sky and you can’t model something compounding at a 30% growth rate,” he said. “However, what I would say is with respect to an impending crash or a massive correction, I want to just remind everyone of who our customer base is. Our customer base, as we keep reminding everyone, is the high-end traveler in each segment we serve.”
He said so far those high-end travelers have indicated a strong desire to travel and have been following up on that desire.
Hoplamazian said the company continues to make significant progress in its goal of selling off $2 billion in owned assets, closing on three hotels in April with another closing set for the second quarter. In total, these sales will account for $812 million in gross proceeds at an implied multiple of 15.7-times 2019 earnings.
The sold hotels are the Hyatt Regency Indian Wells Resort & Spa, the Grand Hyatt San Antonio River Walk and The Driskill in Austin, Texas. The property slated to close soon is The Confidante Miami Beach, which is under contract with Sunstone Hotel Investors.
Hoplamazian said all but the San Antonio property will undergo “transformative renovations in the near term with an aggregate investment of over $145 million.”
“Not only are we selling at strong multiples with long-term management agreements, but we are also selling to strategic buyers who believe deeply in our brands and are investing significant amounts to upgrade and reposition these great hotels,” he said.
First Quarter Performance
Hyatt’s $73 million loss for the first quarter was a significant improvement from the $304 million loss recorded in the first quarter of 2021, and the company also recorded adjusted earnings before interest, taxes, depreciation and amortization of $169 million, up from a loss of $20 million the year prior.
System-wide revenue per available room for the quarter was up 107% year over year to $93.98, with U.S. RevPAR up 126% to $104.45.
The company also recorded 18.6% net rooms growth for the quarter, although the majority of that growth was attributed to the ALG acquisition. Excluding that, net rooms grew 5.2%.
As of press time, Hyatt’s stock was trading at $83.92 a share, down 12% year to date. The NYSE Composite was down 11.8% for the same period.