Hyatt beats on luxury and fee strength

CHICAGO – Hyatt Hotels Corp. followed its comp set for third quarter results with its luxury business driving RevPAR growth in the third quarter, which finished up 0.3% systemwide versus 3Q24.

Hyatt reported net rooms growth 12.1% and 7.0% when excluding acquisitions.

While leisure transient RevPAR was the strongest area of growth, group RevPAR growth was negatively impacted by approximately 100 bps due to the timing of the Rosh Hashanah holiday.

Net Package RevPAR increased 7.6% YOY in the third quarter, further illustrating the strong performance of luxury all-inclusive travel.

“Our third quarter results reflect the strength of our core fee business and our disciplined approach to cost management,” said Hyatt President and CEO Mark Hoplamazian. “As we continue our evolution to a brand-led organization, we are focused on elevating guest experiences, deepening customer loyalty through World of Hyatt, and expanding into high-growth segments and geographies. Looking into the fourth quarter and beyond, we believe our high-end customer base, robust pipeline with significant white space for growth, and rapidly expanding loyalty program position us to drive sustained growth and create long-term value for our shareholders.”

R.W. Baird analyst Michael Bellisario wrote that Hyatt’s total gross fees matched their estimate (RevPAR was a touch better), but Adjusted EBITDA was $9 million ahead of Baird/Street forecasts, suggesting lower Adjusted G&A expense and higher Playa contribution more than offset a significant shortfall in the Distribution segment.

He also noted that Hyatt just announced the renewal/extension of its co-branded credit card with Chase and expects to earn $55 million of incremental earnings in 2027E.

Gross fees of $283 million increased 5.9% in the quarter, compared to the third quarter last year or 6.3% excluding the impact of the Playa Hotels acquisition.

Looking into the fourth quarter and beyond, we believe our high-end customer base, robust pipeline with significant white space for growth, and rapidly expanding loyalty program position us to drive sustained growth and create long-term value for our shareholders.

Mark Hoplamazian

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Hyatt also said it expects to close on the Playa Real Estate Transaction to sell 14 properties to Tortuga Resorts by the end of the year and use the proceeds to repay the amounts outstanding under the $1.7 billion delayed draw term loan used to finance a portion of the Playa Hotels acquisition. Concurrent with the sale, the company will enter into 50-year management agreements for 13 of the 14 properties.

On September 18, one property in Playa del Carmen was sold to a separate third-party buyer for approximately $22 million.

Full-year guidance

Hyatt provided full-year guidance. Excluding the impact of the Playa acquisition and pending transaction, comparable system-wide hotels RevPAR growth is projected between 2% to 2.5%, compared to the full year 2024.

Bellisario noted that full-year earnings guidance is down ~0.5%, which appears to reflect the potential impact from Hurricane Melissa in Jamaica.

Net rooms growth, excluding acquisitions, is projected between 6.3% to 7.0% YOY.

Net income is projected between $70 million and $86 million.

Adjusted EBITDA is projected between $1.090 billion and $1.110 billion, an increase of 7% to 9% YOY after adjusting for assets sold in 2024.

Capital returns to shareholders is projected to be approximately $350 million, through a combination of dividends and share repurchases.

Fee details

Base management fees increased 10%, driven by managed hotel RevPAR growth outside of the U.S. and the contribution of newly opened hotels.

Incentive management fees grew 2%, led by newly opened hotels and hotel performance in Asia Pacific, excluding Greater China.

Franchise and other fees expanded 4%, due to non-RevPAR fee contributions and newly opened hotels, offset by the elimination of fees from the eight Hyatt Ziva and Hyatt Zilara properties that were part of the Playa Hotels acquisition.

Owned and leased segment Adjusted EBITDA increased 7%, compared to the third quarter of 2024, after adjusting for assets sold in 2024 and the impact of the Playa Hotels acquisition. Comparable owned and leased margin decreased by 40 bps in the third quarter, compared to the same period in 2024.

Distribution segment Adjusted EBITDA declined compared to the third quarter of 2024 due to lower booking volumes and the lapping of a one-time benefit from ALG Vacations travel credits last year which was not offset by higher pricing and effective cost management.

Openings, development

Hyatt opened 5,163 rooms during the third quarter and announced a new master franchise agreement with China’s HomeInns Hotel Group with plans to open 50 Hyatt Studios over the next several years and develop a robust pipeline to fuel future growth across China.

The pipeline of executed management or franchise contracts was approximately 141,000 rooms, an increase of 4.4%, compared to the third quarter of 2024.