Hyatt Hotels Corporation reported net income of $120 million for the third quarter ended Sept. 30, compared to a net loss of $161 million. Comparable system-wide RevPAR increased to $93.70 in the quarter, and decreased 31.8% compared to third-quarter 2019 on a reported basis.
“During the quarter, we again produced results that exceeded expectations and demonstrated the resilience of our business,” said Mark S. Hoplamazian, president/CEO, Hyatt Hotels Corporation. “Adjusted EBITDA for the third quarter approached 70% of 2019 levels and more than doubled from the prior quarter. Leisure demand continues to lead the recovery and momentum for business and group travel is growing. The recovery is evident in more markets as travel restrictions ease and borders reopen.”
Third-quarter highlights:
- Adjusted EBITDA increased compared to the third quarter of 2020 to $110 million.
- Comparable owned and leased hotels RevPAR increased to $117.33, and decreased 35.5% compared to the same period of 2019 on a reported basis.
- Net rooms growth of 6.9% compared to the third quarter of 2020.
- Pipeline of executed management or franchise contracts for approximately 103,000 rooms, an increase of 2.0% compared to the third quarter of 2020.
Hoplamazian added, “We made significant progress in the quarter towards executing our long-term strategy through the acquisition of Apple Leisure Group. The transaction closed on Nov. 1, and I’m thrilled to welcome the colleagues from this truly unique leisure platform into the Hyatt family. This acquisition significantly expands our leisure offerings and positions Hyatt as a leader in the fast-growing luxury all-inclusive resort segment. We also advanced our capital strategy through the completion of our $1.5 billion asset disposition commitment during the quarter and we announced a new $2 billion commitment for additional asset sales by the end of 2024. Through the acquisition of Apple Leisure Group’s asset light platform and expansion of our disposition commitment, we expect to transform our earnings to approximately 80% fee-based by year end 2024.”
Operational update
Comparable system-wide RevPAR improved 29% in the quarter, as compared to the prior quarter, driven by a strong recovery in leisure demand and growing momentum in business and group travel. Leisure transient revenue exceeded 2019 levels in July, and after a seasonal and sequential decline in August, returned to nearly fully recovered levels in September. Business transient and group revenue also gained momentum in the quarter, improving more than 40% from the prior quarter. Demand in the U.S. and a strong recovery in Europe were primary drivers of the improved performance.
Comparable owned and leased hotels RevPAR strengthened by 39% in the quarter, as compared to the prior quarter, benefiting from strong leisure demand in the U.S. and the easing of travel restrictions in Europe. Comparable owned and leased operating margins were 20% for the quarter reflecting strong operational execution and an improved demand environment.
As of Sept. 30, 99% of total system-wide hotels (99% of rooms) were open.
Third-quarter results
Third quarter financial results as compared to the third quarter of 2020 are as follows:
Management, franchise and other fees
Total management and franchise fee revenues totaled $96 million in the quarter compared to $40 million reported in the third quarter of 2020, and reflected a sequential improvement from $77 million reported in the second quarter of 2021. Base management fees increased 158.8% to $50 million, incentive management fees increased 54.7% to $10 million, and franchise fees increased 141.6% to $36 million during the quarter. Other fee revenues increased 40.4% to $17 million.
Americas management and franchising segment
Americas management and franchising segment adjusted EBITDA increased to $74 million in the quarter compared to $16 million reported in the third quarter of 2020. Results were led by increases in franchise fees driven by select-service properties and base fees driven by resort properties. As of Sept. 30, 99% of Hyatt’s Americas full- and select-service hotels (99% of rooms) were open.
Americas net rooms increased 5.2% compared to the third quarter of 2020.
ASPAC management and franchising segment
Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia (ASPAC) management and franchising segment adjusted EBITDA decreased to $6 million in the quarter, compared to $9 million reported in the third quarter of 2020. Results across the region reflect the impact of travel restrictions which continue to impact hotel demand. As of Sept. 30, 98% of Hyatt’s ASPAC full- and select-service hotels (99% of rooms) were open.
ASPAC net rooms increased 12.5% compared to the third quarter of 2020.
EAME/SW Asia management and franchising segment
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) management and franchising segment adjusted EBITDA increased to $5 million in the quarter compared to a loss of $2 million reported in the third quarter of 2020. Results across the region were led by Europe as travel restrictions eased leading to increased transient demand. As of Sept. 30, 99% of Hyatt’s EAME/SW Asia full- and select-service hotels (98% of rooms) were open.
EAME/SW Asia net rooms increased 7.3% compared to the third quarter of 2020.
Owned and leased hotels segment
Total owned and leased hotels segment adjusted EBITDA increased to $51 million in the third quarter of 2021 compared to a loss of $56 million reported in the third quarter of 2020. Owned and leased hotels segment results improved meaningfully over the quarter highlighting the strong operating leverage within the portfolio. As of Sept. 30, 97% of Hyatt’s owned and leased hotels (91% of rooms) were open.
Corporate and other
Corporate and other adjusted EBITDA decreased to a loss of $26 million in the quarter compared to a loss of $15 million reported in the third quarter of 2020. This decrease was primarily driven by an increase in certain selling, general and administrative expenses, including payroll and related costs.
Openings and future expansion
Twenty new hotels (or 4,599 rooms) opened in the quarter, contributing to a 6.9% increase in net rooms compared to the third quarter of 2020.
As of Sept. 30, the company had executed management or franchise contracts for approximately 505 hotels (or approximately 103,000 rooms). This compares to approximately 495 hotels (or approximately 101,000 rooms) as of June 30.
2021 outlook
The company is providing the following guidance for the 2021 fiscal year:
- Adjusted selling, general and administrative expenses are expected to be approximately $245 million to $250 million, inclusive of approximately $5 million to $10 million of expenses related to non-recurring integration costs for ALG.
- Capital expenditures are expected to be approximately $110 million.
- Net rooms growth is expected to be greater than 6.0%.
