Hyatt CEO optimistic, but cautious, after strong Q3
 
Hyatt CEO optimistic, but cautious, after strong Q3
04 NOVEMBER 2016 7:49 AM

Hyatt’s assets showed 2.5% systemwide RevPAR growth and 3.8% RevPAR growth at U.S. properties in Q3.

CHICAGO—Following a third quarter that saw revenue per available room grow by 2.5%, Hyatt Hotels Corporation President and CEO Mark Hoplamazian reaffirmed the company’s 2016 RevPAR growth guidance of 2% to 3%.

While he cited some headwinds that will have an impact on the industry moving forward, Hoplamazian was optimistic in his view of Hyatt’s performance for the rest of the year.

“Our outlook for the overall business for the remainder of 2016 is positive,” he told analysts during the company’s Thursday conference call to discuss Q3 2016 earnings. The company held its 2% to 3% RevPAR growth projection for the past two quarters, after lowering it following Q1.

Headwinds
Hoplamazian told analysts that despite the healthy quarter, the company—and the hotel industry at large—face some unknowns as 2017 approaches.

“It’s unambiguous that we had a very strong quarter, and we’ve actually seen improvement in earnings base over the course of the year no matter that there’s been relative deceleration on the RevPAR-growth front,” he said. “While all these fundamentals that we’re building for the long term are absolutely demonstrating positive impact, we also recognize there are some uncertainties as we head into 2017. And that’s why we are hyper-focused and very vigilant on keeping a very close tab on what’s going on so that we can pivot and be responsive to what we’re seeing.”

Hyatt executives are anticipating a number of headwinds for the fourth quarter, such as a dampening effect on hotel performance by the U.S. presidential election and declines in group business, which are consistent with 2016 trends.

Hoplamazian also said the shift of Jewish holidays from October to September 2016 was a boon to group business in the third quarter, but that will reverse in Q4 as the holiday shift will have a negative effect.

Q3 growth
Hyatt’s total net income for Q3 2016 increased by 148% to $62 million, which was driven by strong group business at its U.S. properties, where RevPAR growth was 3.8%, Hoplamazian said. Group rooms revenue at comparable U.S. full-service hotels was up 6% year over year, largely due to an increase in average daily rate of 2.9%.

Several factors that had a positive impact on RevPAR during Hyatt’s Q3 included strong brand performance, particularly Hyatt Place and Hyatt House; success with a new revenue-management system; improved efficiency and productivity; an aggressive asset-recycling strategy; and a targeted development effort.

“We are not trying to blanket the world with as many flags as we can sign up,” Hoplamazian said. “We’re really focused on quality growth in a very deliberate way.”

Hyatt added 11 hotels—comprising 2,314 total rooms—to its global portfolio during the quarter, which was a net rooms increase of 7% year over year. The new properties included three in China that comprise 975 rooms combined. Hyatt reported the highest regional occupancy growth in the quarter (3%) in the Asia/Pacific region.

According to Hyatt’s quarterly earnings news release, the company plans to add more than 60 hotels this year.

Hoplamazian did not reveal Hyatt’s 2017 guidance during the conference call, and no outlook was present in the company’s earnings release.

“With the positive momentum we see in our business, we expect another year of solid growth in 2017,” he said.

As of press time, Hyatt stocks were up 8.5% year to date. The Baird/STR Hotel Stock Index was down 0.8% for the same period.

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