Hyatt expects to be 90% asset light by 2027

CHICAGO — Hyatt Hotels Corp. reported systemwide RevPAR growth of 5% in the fourth quarter and 4.6% for the full year 2024 as part of its 4Q24 earnings. It also reported net room growth of 7.8% for the full year and record-setting gross fees.

Hyatt reported a net income loss of $56 million for Q4 but $1.296 billion for full year 2024. Its adjusted net income was $40 million in Q4 and $375 million for FY2024.

The company also said that following at least $2 billion in asset sales in 2027, it expects its asset-light earnings mix to exceed 90%.

“The purposeful evolution of our business model and strong brand focus has accelerated our network effect benefiting each of our stakeholders,” said President and CEO Mark Hoplamazian. “Our fourth quarter results demonstrate the strength of our commercial offerings, as evidenced by the growth of the World of Hyatt loyalty program, which reached approximately 54 million members. Our operating results and industry-leading net rooms growth allowed us to achieve record levels of gross fees while returning over $1.2 billion to shareholders in 2024.”

Earlier this week, Hyatt finalized a deal to acquire all outstanding shares of all-inclusive owner-operator Playa Hotels & Resorts N.V. for $13.50 per share, or approximately $2.6 billion, including approximately $900 million of debt, net of cash.

At the closing of the Playa deal, Hyatt said it expects to announce a new commitment to realize at least $2 billion of proceeds from asset sales by the end of 2027. The company said this commitment may include existing assets owned by Hyatt and Playa. At closing, it expects to fund 100% of the Playa acquisition with new debt financing, and, following the close of the transaction, expects to pay down over 80% of that financing with anticipated proceeds from the aforementioned asset sales.

In the fourth quarter, 81 new hotels (20,721 rooms) joined Hyatt’s portfolio, including properties acquired through the Standard International and Bahia Principe transactions. Notable openings included Grand Hyatt Deer Valley, Dreams Madeira Resort Spa & Marina, Park Hyatt London River Thames, Thompson Palm Springs, and nine UrCove properties.

By the end of 2024, Hyatt had a pipeline of executed management or franchise contracts for approximately 720 hotels (and approximately 138,000 rooms), representing an expansion of approximately 9% year-over-year. It completed the acquisition of three Alua properties on November 15 for €117 million (approximately $123 million), which it intends to sell.

The company also sold the Hyatt Regency O’Hare Chicago for gross proceeds of $40 million on December 10 to MCR and entered into a long-term franchise agreement. It also sold two unconsolidated hospitality ventures, Park Hyatt Los Cabos at Cabo Del Sol hotel and residences on December 13 and Hyatt Centric Downtown Nashville on December 17 and retained long-term management agreements.

This wasn’t the only recent M&A for Hyatt in 2024, on December 27. Hyatt and Grupo Piñero finalized a 50-50, long-term, asset-light strategic joint venture, adding the Bahia Principe Hotels & Resorts brand to Hyatt’s existing all-inclusive portfolio. 

On October 1, Hyatt acquired the brands of lifestyle company Standard International, including The Standard and Bunkhouse Hotels, for a base purchase price of $150 million, with up to an additional $185 million over time as additional properties enter the portfolio.

Other Q4, full-year 2024 results

• For 2025, Hyatt is projected systemwide RevPAR growth from 2-4% and net rooms growth between 6-7%. Hyatt’s 2025 net income is projected between $190-$240 million, while its full-year adjusted EBITDA is projected between $1.1-1.15 billion.
• Hoplamazian said Hyatt had a record level of gross fees in Q4 ($294 million, up 15% YOY) and is projecting gross fees for the full year 2025 between $1.2-1.23 billion.  
• Hyatt’s adjusted EBITDA was $255 million in Q4 and $1.096 billion for the full year 2024.
• The company repurchased approximately 8 million shares of Class A and Class B common stock for an aggregate purchase price of $1.19 billion for the full year of 2024, returning $1.25 billion to shareholders through dividends and share repurchases.
• In Q4, 81 new hotels (and 20,721 rooms) joined Hyatt’s portfolio, inclusive of properties acquired through the Standard International and Bahia Principe transactions. 
• Through the end of the year, Hyatt had total debt of $3.78 billion, pro rata share of unconsolidated hospitality venture debt of $370 million and total liquidity of approximately $2.9 billion with $1.38 billion of cash and cash equivalents and short-term investments, and borrowing availability of $1.497 billion under Hyatt’s revolving credit facility, net of letters of credit outstanding.

What the analysts said

Analyst Michael Bellisario of R.W. Baird said Hyatt’s earnings news was incrementally negative and a Q4 earnings mix with higher adjusted selling, general and administration expenses was the primary driver. 

“Better RevPAR and slightly better gross fees plus higher owned/leased/JV earnings were offset by weaker distribution results,” he said. “Net, net – earnings missed while peers have been beating. Adjusted EBITDA guidance for 2025 is ~4% below consensus (or ~3% below adjusted for 4Q24 dispositions) and we attribute some of the shortfall to higher adjusted G&A expenses ($15 million vs. our model; potentially due to Bahia Principe). Some timing and one-time items are impacting the outlook, but still a headline miss.”

Bellisario noted that Hyatt’s net rooms growth was just above the low end of Hyatt’s most recent guidance of 7.75%-8.25% while adjusted EBITDA of $255 million fell below the guidance from Baird ($267 million) or Wall Street ($273 million).

Analyst Michale Scholes of Truist Securities said distribution and other revenues were light and G&A expenses was higher than consensus while RevPAR was ahead.

“4Q24 adjusted EBITDA of $255 million was below our at-consensus estimate of $273 million,” he said. “No specific 4Q earnings guidance was provided but implied guidance as of 3Q24 earnings was $269M-289M. Adjusted EPS of $0.42 compares with very wide consensus of $0.75 (includes high and low outliers) and our estimate of $0.85.”