Hyatt reports solid earnings, adjusts NUG outlook

CHICAGO – Hyatt Hotels Corp. reported solid 3Q24 earnings that included a 10% year-over-year (YOY) increase in its managed and franchised pipeline to a record 135,000 rooms for a net rooms growth of 4.3%.

For the full year, Hyatt is projecting net rooms growth of 7.75% to 8.25%. Excluding its recent deal with Grupo Piñero to manage the Bahia Principe branded hotels, full-year net rooms growth will be 4.0% to 4.5%. According to R.W. Baird analyst Michael Bellisario, Hyatt reduced same-store net rooms growth guidance (-150 bps ex-Bahia Principe). He said it was previously in the 5.5%-6.0% range. 

Hyatt continued its asset-light strategy, disposing of the Hyatt Regency Orlando and acquiring Standard International and newly announcing a planned joint venture transaction to manage Bahia Principe branded hotels and resorts. The model has led to the return of over $1.2 billion to shareholders through share repurchases and dividends so far this year, according to CEO Mark Hoplamazian.

Hyatt has realized $2.6 billion of gross proceeds, net of acquisitions, at a 13.3x multiple over the three-year period and expects to exceed 80% asset-light earnings mix in 2025.

For the Grupo Piñero deal, Hyatt said it is investing €359 million at closing for 50% of the joint venture plus an additional €60 million when certain conditions are met. Upon closing, this transaction will add 23 all-inclusive resorts (or approximately 12,000 rooms) to Hyatt's managed portfolio.

Comparable systemwide hotels RevPAR increased 3.0% YOY. However, all-inclusive resorts Net Package RevPAR decreased 0.9% YOY (Americas was -5.2%). U.S. RevPAR was +1.2%; Europe was +15.0%; Asia Pacific (ex-China) was 10.4%; and Greater China was -6.7%.

Full year comparable systemwide RevPAR is unchanged, projected to increase 3.0% to 4.0% on a constant currency basis compared to full year 2023.

Hyatt stated management and franchising results reflected strong business transient and group travel demand during the third quarter. In the U.S, performance was driven by business transient and group travel while leisure was impacted by renovations, weather, and increased international outbound to Europe and Asia Pacific (excluding Greater China). In Europe, RevPAR increased 15% during the period, bolstered by the Summer Olympics in Paris. Greater China continued to experience meaningful international outbound travel to other markets within Asia, with RevPAR in Asia Pacific (excluding Greater China) up 10% during the quarter.

Among owned and leased properties, adjusted EBITDA in the third quarter increased 13% YOY when adjusted for the net impact of transactions. Comparable margins increased 210 bps compared to the third quarter of 2023, led by strong ADR from the Democratic National Convention in Chicago and the Summer Olympics in Paris.

Results for 3Q24 reflected more seasonal booking patterns compared to last year and the impact of Hurricanes Beryl and Helene, partially offset by Mr & Mrs Smith commissions and certain ALG Vacations travel credits. Excluding the impact of the Unlimited Vacation Club transaction, Adjusted EBITDA decreased $5 million.

Hyatt’s gross fee revenues reached $268 million, and its loyalty program grew 22% YOY to 51 million members.

Full year net income is projected between $1.4-$1.45 billion, while full year adjusted EBITDA is projected between $1.1-$1.12 billion. Full year capital returns to shareholders is projected to be approximately $1.25 billion.

Bellisario concluded that this new update reflects -$20 million and -$5 million at the high ends of adjusted EBITDA and gross fees (now $1.085-$1.110 billion), respectively. "We assume the delta between the two relates primarily to a weaker distribution outlook and perhaps a lower owned/leased/JV outlook, too," he said.