Hyatt misses expectations on earnings but reports record for gross fees
and pipeline, as well as significant progress on asset disposition.
CHICAGO - Hyatt Hotels Corp. reported a mixed bag of results for 1Q24 with
adjusted EPS of $0.71, short of Street consensus by $0.06. At the same time, global
RevPAR increased 5.5% year-over-year (YOY), pipeline (670 hotels/129,000 rooms)
was up 10% YOY, and gross revenues reached a record $262 million for the
quarter.
Adjusted EBITDA for the quarter was $252 million, a 9%
decreased YOY when adjusted for asset dispositions. The decline was driven by
difficult comparisons to 2023, including the Super Bowl in Phoenix, higher real
estate taxes, higher wages, and transaction costs related to asset sales in
process.
Hyatt’s full-year guidance includes a 3% to 5% increase in
RevPAR and net rooms growth between 5.5% to 6%. The forecast for full-year net
income ranges from $1.135 billion to $1.195 billion, while adjusted EBITDA is
expected to be between $1.150 billion and $1.190 billion.
Regional highlights include strong outbound travel from Greater China, benefiting markets such as Japan, Thailand, and South Korea. Leisure demand was strong in Mexico and the Caribbean for hotels and all-inclusive resorts. European all-inclusive properties produced growth driven by high demand in the Canary Islands.
Hyatt Hotels Corp.
Hyatt reported that management and franchise fee results in
the first quarter were driven by solid demand across all customer segments.
Regional highlights include strong outbound travel from Greater China,
benefiting markets such as Japan, Thailand, and South Korea. Leisure demand was
strong in Mexico and the Caribbean for hotels and all-inclusive resorts.
European all-inclusive properties produced Net Package RevPAR growth driven by
high demand for resorts in the Canary Islands. Domestically, RevPAR was up
approximately 2%, excluding the impact of Easter, reflecting normalized growth.
"Hyatt's
1Q24 results were messy and non-comparable to consensus; we were the Street low
for Adjusted EBITDA, and we were having difficulty getting the earnings bridge
to foot," wrote R.W. Baird analyst Michael Bellisario. "Investors should focus on full-year guidance (unchanged) and the
progress with asset sales, including the one large hotel under PSA that would
result in Hyatt achieving its $2.0 billion asset sell-down commitment."
In the first quarter, 12 new hotels (or 2,425 rooms) joined
Hyatt’s portfolio.
Hyatt completed the sale of 80% of the entity that owns the
Unlimited Vacation Club business and closed the sale of Hyatt Regency Aruba
Resort Spa and Casino.
It also sold the Park Hyatt Zurich on April 4, the Hyatt
Regency San Antonio Riverwalk on April 23, and the Hyatt Regency Green Bay on
May 1 to unrelated third parties for combined proceeds of $535 million at a
14.7x multiple. The company also entered into long-term management agreements
for Park Hyatt Zurich and Hyatt Regency San Antonio Riverwalk, and a long-term
franchise agreement for Hyatt Regency Green Bay. In connection with the Park
Hyatt Zurich transaction, Hyatt provided approximately $45 million of
seller financing.
As mentioned by Bellisario, Hyatt also signed a purchase and sale agreement for an asset
that, upon closing, would generate gross proceeds that exceed the remaining
portion of the company's $2 billion asset sell-down commitment.
As of May 9, Hyatt has realized $1.5 billion of gross
proceeds from the net disposition of real estate at a 13.3x multiple and said
it remains committed to successfully executing plans to realize $2 billion of
gross proceeds from the sale of real estate, net of acquisitions, by the end of
2024 as part of its expanded asset disposition commitment announced in August
2021.
On February 28, Juniper Hotels, one of Hyatt’s unconsolidated
hospitality ventures in India, completed an IPO on the BSE Limited and National
Stock Exchange of India. The company holds approximately 86 million equity
shares and following the IPO, retained a 38.8% ownership interest in the
unconsolidated hospitality venture.
During the first quarter, Hyatt repurchased 528,427 shares
of Class A common stock for approximately $76 million and 1,987,229 shares of
Class B common stock for approximately $312 million. The company’s board
of directors has authorized the repurchase of up to an additional $1 billion of
the company’s common stock.
The board of directors has declared a cash
dividend of $0.15 per share for the second quarter of 2024.