Hyatt increased 2023
guidance for systemwide RevPAR to 12%-16%, up from the prior 10%-15% range. Net
rooms growth remained unchanged at ~6%.
CHICAGO – Hyatt Hotels Corp. beat the Street during 1Q23 led by 42.9%
YOY RevPAR growth, aided by strong recovery in Asia Pacific and ADR growth of
12%. Hyatt's Adjusted EBITDA topped expectations by 4% at $268 million ($169
million in 1Q22), including $79 million from Apple Leisure Group.
Business transient is showing the strongest relative
recovery, more than doubling last year's first quarter revenue, and reaching
approximately 85% of first quarter of 2019 levels, with March especially encouraging
reaching 92% of March 2019 levels.
From a geographic perspective, Hyatt’s Asia Pacific region
contributed significantly to its first quarter growth and was 3% ahead of 1Q19
levels.
Hyatt increased 2023 guidance for systemwide RevPAR to 12%-16%,
up from the prior 10%-15% range. Net rooms growth remained unchanged at ~6%.
Its development pipeline was also unchanged at 117,000 rooms (580 hotels).
Excluding the Dream Hotel Group acquisition, Hyatt opened 16 new hotels with
>3,200 rooms – on par with 1Q19.
During the earnings conference call, Hyatt CEO Mark
Hoplamazian pointed to what he called an “overwhelming response” from its
ownership community to the launch of the newly launched upper-midscale Hyatt Studios brand with
letters of interest representing over 100 hotels. He said construction is expected
to begin later this year, and the first hotel to open in 2024.
More generally, Hoplamazian said Hyatt maintained the
percentage of rooms under construction relative to its pipelines across a
diverse number of countries and markets. “Despite a more difficult lending
environment, we continue to see developers start construction for their
properties in the U.S. and around the globe,” he added. “It’s also great to see
conversion opportunities continuing to represent a material percentage of our
net rooms growth at approximately 30% of our first quarter openings (excluding
the acquisition of Dream Hotel Group).”
That said, Hoplamazian did concede that the capital
formation for new starts is very challenging because regional and local banks have
backed up their provision of credit. But in reference to Hyatt Studios, he
said, “In discussions with a number of our developers with respect to our new
brand, more and more are recognizing that while there’s a crisis of confidence in
banking right now, it is likely a short-term phenomenon – almost certainly a
short-term phenomenon. Therefore, when you look at the relatively lower supply
growth that the industry has experienced and given the attractiveness of the
brand that we just launched, we are hearing from our developers that they’re
ready to to begin construction, even if they have to over equitize, or
otherwise get more creative about sources of capital.”
In reference to Hyatt’s pipeline in China, Hoplamazian said
they still have quite a few projects on hold, but does not expect them to
remain on hold for much longer. “We expect to see an increasing level of
properties under construction in China over the course of this year,” he said. “Signings
actually remained robust, and we’ve had a couple of great openings of luxury
hotels.”
Other 1Q23 highlights:
* Net income was $58 million compared to net loss of $73
million in the first quarter of 2022
* Adjusted net income was $45 million compared to Adjusted net
loss of $36 million in the first quarter of 2022
* Comparable all-inclusive net package RevPAR increased
33.2% compared to 1Q22
* Net rooms growth was approximately 7%
* Share repurchase activity was approximately 1.02
million shares repurchased for $106 million
* Occupancy improved 1,400 basis points vs. 1Q22
* A record level of total management, franchise, license, and
other fees of $231 million, up 50% vs. 1Q22
* Hyatt is marketing two assets for sale with the expectation
of realizing $2 billion of gross proceeds net of acquisitions by the end of
2024