Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
This quarterly report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include statements about the Company's plans, strategies, and financial performance; the impact of the COVID-19 pandemic and pace of recovery; the amount by which the Company intends to reduce its real estate asset base and the anticipated timeframe for such asset dispositions; and prospective or future events. Forward-looking statements involve known and unknown risks that are difficult to predict. As a result, our actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "continue," "likely," "will," "would," and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to: the factors discussed in our filings with the SEC, including our Annual Report on Form 10-K; risks associated with the consummation of the ALG acquisition, including the related incurrence of material additional indebtedness; our ability to successfully integrate ALG's employees and operations into ours; the ability to realize the anticipated benefits of the acquisition of ALG as rapidly or to the extent anticipated; the duration of the COVID-19 pandemic and the pace of recovery following the pandemic, any additional resurgence, or COVID-19 variants; the short and longer-term effects of the COVID-19 pandemic, including the demand for travel, transient and group business, and levels of consumer confidence; the impact of the COVID-19 pandemic, any additional resurgence, or COVID-19 variants, and the impact of actions that governments, businesses, and individuals take in response, on global and regional economies, travel limitations or bans, and economic activity, including the duration and magnitude of its impact on unemployment rates and consumer discretionary spending; the broad distribution and efficacy of COVID-19 vaccines and wide acceptance by the general population of such vaccines; the ability of third-party owners, franchisees, or hospitality venture partners to successfully navigate the impacts of the COVID-19 pandemic, any additional resurgence, or COVID-19 variants; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the rate and the pace of economic recovery following economic downturns; global supply chain constraints and interruptions; risks affecting the luxury, resort, and all-inclusive lodging segments; levels of spending in business, leisure, and all-inclusive segments as well as consumer confidence; declines in occupancy and average daily rate ("ADR"); limited visibility with respect to future bookings; loss of key personnel; domestic and international political and geo-political conditions, including political or civil unrest or changes in trade policy; hostilities, or fear of hostilities, including future terrorist attacks, that affect travel; travel-related accidents; natural or man-made disasters such as earthquakes, tsunamis, tornadoes, hurricanes, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases, such as the COVID-19 pandemic, or fear of such outbreaks; our ability to successfully achieve certain levels of operating profits at hotels that have performance tests or guarantees in favor of our third-party owners; the impact of hotel renovations and redevelopments; risks associated with our capital allocation plans, share repurchase program, and dividend payments, including a reduction in, or elimination or suspension of, repurchase activity or dividend payments; the seasonal and cyclical nature of the real estate and hospitality businesses; changes in distribution arrangements, such as through internet travel intermediaries; changes in the tastes and preferences of our customers; relationships with colleagues and labor unions and changes in labor laws; the financial condition of, and our relationships with, third-party property owners, franchisees, and hospitality venture partners; the possible inability of third-party owners, franchisees, or development partners to access capital necessary to fund current operations or implement our plans for growth; risks associated with potential acquisitions and dispositions and the introduction of new brand concepts; the timing of acquisitions and dispositions and our ability to successfully integrate completed acquisitions with existing operations; failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals); our ability to successfully execute on our strategy to expand our management and franchising business while at the same time reducing our real estate asset base within targeted timeframes and at expected values; declines in the value of our real estate assets; unforeseen terminations of our management or franchise agreements; changes in federal, state, local, or foreign tax law; increases in interest rates and operating costs; foreign exchange rate fluctuations or currency restructurings; lack of acceptance of new brands or innovation; general volatility of the capital markets and our ability to access such markets; changes in the competitive environment in our industry, including as a result of the COVID-19 pandemic, industry consolidation, and the markets where we operate; our ability to successfully grow the World of Hyatt loyalty program and ALG's membership offering; cyber incidents and information technology failures; outcomes of legal or administrative proceedings; and violations of regulations or laws related to our franchising business.
These factors are not necessarily all of the important factors that could cause our actual results, performance, or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our business, financial condition, results of operations, or cash flows. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and we do not undertake or assume any obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions, or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
The following discussion should be read in conjunction with the Company's condensed consolidated financial statements and accompanying Notes, which appear elsewhere in this Quarterly Report on Form 10-Q.
Executive Overview
We provide hospitality and other services on a worldwide basis through the operation, management, franchising, ownership, development, and licensing of hospitality businesses. We operate, manage, franchise, own, lease, develop, license, or provide services to a portfolio of properties consisting of full service hotels, select service hotels, all-inclusive resorts, and other properties, including timeshare, fractional, and other forms of residential, vacation, and condominium ownership units.
At September 30, 2021, our worldwide hotel portfolio consisted of 1,028 hotels (244,879 rooms), including:
•427 managed properties (131,821 rooms), all of which we operate under management and hotel services agreements with third-party property owners;
•529 franchised properties (88,307 rooms), all of which are owned by third parties that have franchise agreements with us and are operated by third parties;
•30 owned properties (12,906 rooms) (including 1 consolidated hospitality venture), 1 finance leased property (171 rooms), and 6 operating leased properties (2,087 rooms), all of which we manage;
•25 managed properties and 2 franchised properties owned or leased by unconsolidated hospitality ventures (8,132 rooms); and
•8 franchised properties (1,455 rooms) that are operated by an unconsolidated hospitality venture in connection with a master license agreement by Hyatt, 3 of these properties (669 rooms) are leased by the unconsolidated hospitality venture.
Our worldwide property portfolio also included:
•9 all-inclusive resorts (3,591 rooms), all of which are owned by a third party in which we hold common shares and which operates the resorts under franchise agreements with us;
•16 vacation ownership properties under the Hyatt Residence Club brand and operated by third parties;
•34 residential properties, which consist of branded residences and serviced apartments. We manage all of the serviced apartments and those branded residential units that participate in a rental program with an adjacent Hyatt-branded hotel; and
•39 condominium ownership properties for which we provide services for the rental programs and/or homeowners associations (including 1 unconsolidated hospitality venture).
Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and operate under other tradenames or marks owned by such hotels or licensed by third parties.
We report our consolidated operations in U.S. dollars. Amounts are reported in millions, unless otherwise noted. Percentages may not recompute due to rounding, and percentage changes that are not meaningful are presented as "NM." Constant currency disclosures used throughout Management's Discussion and Analysis of Financial Condition and Results of Operations are non-GAAP measures. See "—Non-GAAP Measures" for further
discussion of constant currency disclosures. We manage our business within four reportable segments as described below:
•Owned and leased hotels, which consists of our owned and leased full service and select service hotels and, for purposes of segment Adjusted EBITDA, our pro rata share of the Adjusted EBITDA of our unconsolidated hospitality ventures, based on our ownership percentage of each venture;
•Americas management and franchising ("Americas"), which consists of our management and franchising of properties located in the United States, Latin America, Canada, and the Caribbean, as well as our residential management operations;
•ASPAC management and franchising ("ASPAC"), which consists of our management and franchising of properties located in Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan, and Micronesia; and
•EAME/SW Asia management and franchising ("EAME/SW Asia"), which consists of our management and franchising of properties located in Europe, Africa, the Middle East, India, Central Asia, and Nepal.
Within corporate and other, we include the results from our co-branded credit card program, the results of the Exhale spa and fitness business, which was sold during the year ended December 31, 2020, and unallocated corporate expenses. See Part I, Item 1 "Financial Statements—Note 16 to the Condensed Consolidated Financial Statements" for further discussion of our segment structure.
Overview of the Impact of the COVID-19 Pandemic
The global spread of the COVID-19 pandemic and its impacts are complex and continue to evolve, resulting in significant disruption to our business, the lodging and hospitality industries, and the global economy. The pandemic and its impacts have significantly reduced global travel, demand for hotel rooms, and travel experiences, and have had a material impact on global commercial activity across the travel, lodging, and hospitality industries, which has had, and is expected to continue to have, a material impact on our business, results of operations, cash flows, and financial condition. While recovery from the pandemic is underway, we expect demand for hospitality services could continue to be uneven in the near term as there remains uncertainty as to the pace of recovery of demand for lodging and travel-related experiences.
We have seen improvement in our comparable system-wide RevPAR for the quarter ended September 30, 2021 compared with the quarter ended June 30, 2021, led by strong leisure demand. As business traveler and consumer confidence improves and government and corporate restrictions on travel and freedom of movement are lifted, we expect to continue to see increased demand for business transient and group travel. However, as cases of COVID-19 persist in various regions around the globe and new COVID-19 variants emerge, restrictions still remain in certain markets, which has created, and may continue to create, demand volatility.
We have, at times, suspended operations at certain hotels across our portfolio in response to government restrictions and low levels of demand, but as restrictions have been lifted and demand has increased, we have re-opened the majority of our hotels. At September 30, 2021, 99% of our system-wide hotels were open.
Overview of Financial Results
For the quarter ended September 30, 2021, we reported net income attributable to Hyatt Hotels Corporation of $120 million, representing a $281 million increase, compared to the quarter ended September 30, 2020, driven by improved operating performance and a pre-tax gain on the sale of Hyatt Regency Lake Tahoe Resort, Spa and Casino, partially offset by an increase in tax expense.
Consolidated revenues increased $452 million, or 113.3% ($451 million, or 112.8%, excluding the impact of currency), during the quarter ended September 30, 2021 compared to the quarter ended September 30, 2020. The increases in owned and leased hotels revenues; management, franchise, and other fees; other revenues; and revenues for the reimbursement of costs incurred on behalf of managed and franchised properties of $183 million, $61 million, $21 million, and $189 million, respectively, for the quarter ended September 30, 2021, compared to the quarter ended September 30, 2020, were driven by continuing recovery in operating performance as compared to the prior year, largely driven by leisure travel within certain markets.
During the quarter ended September 30, 2021, compared to the same period in 2020, we have seen group bookings production improve at our full service managed hotels in the Americas, including owned and leased hotels, with September gross production at the highest level since the onset of the COVID-19 pandemic, though still significantly lower than pre-COVID-19 pandemic levels. During the quarter, we experienced positive net booking production for 2021. In certain locations, revenues associated with group booking demand could be dependent on travel restrictions related to gatherings being lifted and confidence from meeting planners and businesses that their attendees are comfortable traveling.
Our consolidated Adjusted EBITDA for the quarter ended September 30, 2021 increased $158 million, compared to the third quarter of 2020, driven by the aforementioned increases in revenues due to the ongoing recovery from the prior year impacts of the COVID-19 pandemic. The increase in Adjusted EBITDA was primarily driven by our owned and leased hotels segment and Americas management and franchising segment, which increased $107 million and $58 million, respectively, for the quarter ended September 30, 2021, compared to the same period in the prior year. See "—Segment Results" for further discussion. See "—Non-GAAP Measures" for an explanation of how we utilize Adjusted EBITDA, why we present it, and material limitations on its usefulness, as well as a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.
During the quarter ended September 30, 2021, there were no returns of capital to our shareholders through share repurchases, and there was no quarterly dividend payment as we suspended all share repurchase activity and dividend payments beginning in March 2020.
During the quarter ended September 30, 2021, we completed our 2019 commitment to realize $1.5 billion of proceeds through the sale of real estate and announced an additional commitment to realize $2.0 billion of proceeds from the disposition of owned assets by the end of 2024.
Hotel Chain Revenue per Available Room ("RevPAR") Statistics.
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RevPAR
|
|
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Three Months Ended September 30,
|
|
(Comparable locations)
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|
Number of comparable hotels (1)
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|
2021
|
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vs. 2020
(in constant $)
|
|
System-wide hotels
|
|
876
|
|
$
|
94
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|
|
|
|
|
|
137.8
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%
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Owned and leased hotels
|
|
33
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|
$
|
117
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|
|
|
|
|
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428.3
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%
|
|
Americas full service hotels
|
|
213
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|
$
|
114
|
|
|
|
|
|
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303.1
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%
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|
Americas select service hotels
|
|
409
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|
$
|
94
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|
|
|
|
|
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102.4
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%
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ASPAC full service hotels
|
|
111
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|
$
|
64
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|
|
|
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|
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5.7
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%
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|
ASPAC select service hotels
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|
25
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|
$
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36
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|
|
|
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(4.1)
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%
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EAME/SW Asia full service hotels
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100
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|
$
|
83
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|
|
|
|
|
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162.6
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%
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EAME/SW Asia select service hotels
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|
18
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|
$
|
46
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|
|
|
|
|
|
106.7
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%
|
|
(1) The number of comparable hotels presented above includes owned and leased hotels and hotels that had temporarily suspended operations for a portion of 2020 and/or 2021 due to the COVID-19 pandemic.
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System-wide RevPAR increased 137.8% during the three months ended September 30, 2021, compared to the three months ended September 30, 2020, driven by increased demand due to the continued recovery from the COVID-19 pandemic. Leisure demand continues to lead the recovery as travel restrictions have eased in certain markets. See "—Segment Results" for discussion of RevPAR by segment.
Our comparable system-wide hotels RevPAR of $94 and $39 for the three months ended September 30, 2021 and September 30, 2020, respectively, remain significantly below pre-COVID-19 pandemic levels of previously reported comparable system-wide hotels RevPAR of $137 for the three months ended September 30, 2019. While uncertainty surrounding the recovery remains, we have experienced growing momentum in our business transient and group business, and it is our expectation that both will continue to improve over the coming months. Leisure transient demand is expected to remain durable, but demand may be varied and uneven in the current environment.
Results of Operations
Three and Nine Months Ended September 30, 2021 Compared with Three and Nine Months Ended September 30, 2020
Discussion on Consolidated Results
For additional information regarding our consolidated results, refer to our condensed consolidated statements of income (loss) included in this quarterly report. Consolidated results were impacted significantly by the COVID-19 pandemic during the three and nine months ended September 30, 2021 and September 30, 2020. See "—Segment Results" for further discussion.
The impact from our investments in marketable securities held to fund our deferred compensation plans through rabbi trusts was recognized on the various financial statement line items discussed below and had no impact on net income (loss).
Owned and leased hotels revenues.
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Three Months Ended September 30,
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2021
|
|
2020
|
|
Better / (Worse)
|
|
Currency Impact
|
|
Comparable owned and leased hotels revenues
|
$
|
220
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|
|
$
|
49
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|
|
$
|
171
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|
|
348.0
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%
|
|
$
|
—
|
|
|
Non-comparable owned and leased hotels revenues
|
43
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|
|
31
|
|
|
12
|
|
|
38.6
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%
|
|
—
|
|
|
Total owned and leased hotels revenues
|
$
|
263
|
|
|
$
|
80
|
|
|
$
|
183
|
|
|
228.9
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Currency Impact
|
|
Comparable owned and leased hotels revenues
|
$
|
465
|
|
|
$
|
340
|
|
|
$
|
125
|
|
|
36.9
|
%
|
|
$
|
2
|
|
|
Non-comparable owned and leased hotels revenues
|
93
|
|
|
82
|
|
|
11
|
|
|
12.7
|
%
|
|
—
|
|
|
Total owned and leased hotels revenues
|
$
|
558
|
|
|
$
|
422
|
|
|
$
|
136
|
|
|
32.2
|
%
|
|
$
|
2
|
|
Comparable owned and leased hotels revenues increased during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, driven by increased demand and hotel re-openings following the suspension of operations at a number of hotels in 2020 due to the COVID-19 pandemic.
Non-comparable owned and leased hotels revenues increased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, driven primarily by acquisitions in 2021 and two properties undergoing renovations during 2020, partially offset by disposition activity. Additionally, the aforementioned increase in non-comparable owned and leased hotels revenues during the nine months ended September 30, 2021, compared to the same period in the prior year, was partially offset by the extended closure of an owned hotel. See "—Segment Results" for further discussion.
Management, franchise, and other fees revenues.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Base management fees
|
$
|
50
|
|
|
$
|
19
|
|
|
$
|
31
|
|
|
158.8
|
%
|
|
Incentive management fees
|
10
|
|
|
6
|
|
|
4
|
|
|
54.7
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%
|
|
Franchise fees
|
36
|
|
|
15
|
|
|
21
|
|
|
141.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Management and franchise fees
|
96
|
|
|
40
|
|
|
56
|
|
|
136.5
|
%
|
|
Other fees revenues
|
17
|
|
|
12
|
|
|
5
|
|
|
40.4
|
%
|
|
Management, franchise, and other fees
|
$
|
113
|
|
|
$
|
52
|
|
|
$
|
61
|
|
|
115.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
113
|
|
|
$
|
52
|
|
|
$
|
61
|
|
|
115.7
|
%
|
|
|
|
|
|
|
|
|
|
Contra revenue
|
(9)
|
|
|
(7)
|
|
|
(2)
|
|
|
(34.3)
|
%
|
|
|
|
|
|
|
|
|
|
Net management, franchise, and other fees
|
$
|
104
|
|
|
$
|
45
|
|
|
$
|
59
|
|
|
127.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Base management fees
|
$
|
110
|
|
|
$
|
74
|
|
|
$
|
36
|
|
|
49.3
|
%
|
|
Incentive management fees
|
30
|
|
|
12
|
|
|
18
|
|
|
142.4
|
%
|
|
Franchise fees
|
82
|
|
|
48
|
|
|
34
|
|
|
69.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Management and franchise fees
|
222
|
|
|
134
|
|
|
88
|
|
|
65.0
|
%
|
|
Other fees revenues
|
47
|
|
|
46
|
|
|
1
|
|
|
2.1
|
%
|
|
Management, franchise, and other fees
|
$
|
269
|
|
|
$
|
180
|
|
|
$
|
89
|
|
|
49.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Management, franchise, and other fees
|
$
|
269
|
|
|
$
|
180
|
|
|
$
|
89
|
|
|
49.1
|
%
|
|
Contra revenue
|
(26)
|
|
|
(20)
|
|
|
(6)
|
|
|
(30.3)
|
%
|
|
Net management, franchise, and other fees
|
$
|
243
|
|
|
$
|
160
|
|
|
$
|
83
|
|
|
51.4
|
%
|
The increases in management and franchise fees during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, were due to increased demand driven by the ongoing recovery in 2021, compared to the decreased demand and suspended hotel operations at a number of hotels in 2020 as a result of the COVID-19 pandemic.
Other fees revenues increased for the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by increased license fees related to our co-branded credit card. During the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, the aforementioned increase was partially offset by a decrease in license fees in the Americas and ASPAC management and franchising segments. The increase in Contra revenue during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by an accrued performance cure payment.
Other revenues. During the three and nine months ended September 30, 2021, other revenues increased $21 million and $24 million, respectively, compared to the three and nine months ended September 30, 2020, primarily driven by the impact of the COVID-19 pandemic on our residential management operations during the prior year. The aforementioned favorability in our residential management operations was partially offset by decreased revenues due to the sale of the Exhale spa and fitness business during the fourth quarter of 2020.
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Change
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
$
|
456
|
|
|
$
|
267
|
|
|
$
|
189
|
|
|
71.0
|
%
|
|
Less: rabbi trust impact
|
1
|
|
|
(10)
|
|
|
11
|
|
|
104.2
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact
|
$
|
457
|
|
|
$
|
257
|
|
|
$
|
200
|
|
|
77.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Change
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
$
|
1,082
|
|
|
$
|
1,015
|
|
|
$
|
67
|
|
|
6.7
|
%
|
|
Less: rabbi trust impact
|
(15)
|
|
|
(11)
|
|
|
(4)
|
|
|
(42.3)
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties excluding rabbi trust impact
|
$
|
1,067
|
|
|
$
|
1,004
|
|
|
$
|
63
|
|
|
6.3
|
%
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties increased during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, primarily driven by higher reimbursements for payroll and related costs and system-wide services provided to managed and franchised properties due to hotels resuming operations after prior year suspensions and improved hotel operating performance.
The increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the three months ended September 30, 2021, compared to the three months ended September 30, 2020, included an $11 million decrease in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to declines in market performance. The increase in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, included a $4 million increase in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to improved market performance.
Owned and leased hotels expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
|
|
Comparable owned and leased hotels expenses
|
$
|
176
|
|
|
$
|
96
|
|
|
$
|
(80)
|
|
|
(83.5)
|
%
|
|
|
|
Non-comparable owned and leased hotels expenses
|
32
|
|
|
32
|
|
|
—
|
|
|
0.4
|
%
|
|
|
|
Rabbi trust impact
|
—
|
|
|
3
|
|
|
3
|
|
|
103.5
|
%
|
|
|
|
Total owned and leased hotels expenses
|
$
|
208
|
|
|
$
|
131
|
|
|
$
|
(77)
|
|
|
(58.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Comparable owned and leased hotels expenses
|
$
|
413
|
|
|
$
|
387
|
|
|
$
|
(26)
|
|
|
(6.8)
|
%
|
|
Non-comparable owned and leased hotels expenses
|
88
|
|
|
105
|
|
|
17
|
|
|
16.8
|
%
|
|
Rabbi trust impact
|
5
|
|
|
3
|
|
|
(2)
|
|
|
(56.4)
|
%
|
|
Total owned and leased hotels expenses
|
$
|
506
|
|
|
$
|
495
|
|
|
$
|
(11)
|
|
|
(2.0)
|
%
|
The increases in comparable owned and leased hotels expenses during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, were primarily due to higher variable expenses driven by hotels re-opening following the suspension of operations at a number of hotels in 2020 due to the COVID-19 pandemic and increased demand.
During the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, non-comparable owned and leased hotels expenses decreased primarily due to the extended closure of an owned hotel, partially offset by transaction activity and properties undergoing renovations during 2020. See "—Segment Results" for further discussion.
Other direct costs. During the three and nine months ended September 30, 2021, other direct costs increased $22 million and $28 million, respectively, compared to the same periods in the prior year, primarily driven by the impact of the COVID-19 pandemic on our residential management operations during the prior year as well as increases related to our co-branded credit card program from higher cardholder spend and point transfers, partially offset by decreased expenses due to the sale of the Exhale spa and fitness business during the fourth quarter of 2020.
Selling, general, and administrative expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Change
|
|
Selling, general, and administrative expenses
|
$
|
69
|
|
|
$
|
69
|
|
|
$
|
—
|
|
|
0.6
|
%
|
|
Less: rabbi trust impact
|
1
|
|
|
(19)
|
|
|
20
|
|
|
104.6
|
%
|
|
Less: stock-based compensation expense
|
(6)
|
|
|
(3)
|
|
|
(3)
|
|
|
(107.5)
|
%
|
|
Adjusted selling, general, and administrative expenses
|
$
|
64
|
|
|
$
|
47
|
|
|
$
|
17
|
|
|
36.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Change
|
|
Selling, general, and administrative expenses
|
$
|
250
|
|
|
$
|
217
|
|
|
$
|
33
|
|
|
15.7
|
%
|
|
Less: rabbi trust impact
|
(30)
|
|
|
(20)
|
|
|
(10)
|
|
|
(51.3)
|
%
|
|
Less: stock-based compensation expense
|
(42)
|
|
|
(20)
|
|
|
(22)
|
|
|
(109.4)
|
%
|
|
Adjusted selling, general, and administrative expenses
|
$
|
178
|
|
|
$
|
177
|
|
|
$
|
1
|
|
|
1.0
|
%
|
Selling, general, and administrative expenses were flat during the three months ended September 30, 2021, compared to the same period in the prior year, as increased expenses in 2021 were offset by the decline in market performance of the underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts. The aforementioned increases in expenses for the three months ended September 30, 2021, compared to the same period in the prior year, were due to prior year cost containment initiatives, primarily payroll and related costs, and increased stock-based compensation expense.
Selling, general, and administrative expenses increased during the nine months ended September 30, 2021, compared to the same period in the prior year, primarily driven by a reversal of previously recognized stock-based compensation expense related to certain PSU awards during the nine months ended September 30, 2020; increases in payroll and related costs resulting from cost containment initiatives during 2020; and the improved market performance of the underlying investments in marketable securities held to fund our deferred compensation plans through rabbi trusts. The increases were partially offset by a decrease in bad debt expense for the nine months ended September 30, 2021 compared to the same period in the prior year.
Adjusted selling, general, and administrative expenses exclude the impact of deferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. See "—Non-GAAP Measures" for further discussion of Adjusted selling, general, and administrative expenses.
Costs incurred on behalf of managed and franchised properties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Change
|
|
Costs incurred on behalf of managed and franchised properties
|
$
|
465
|
|
|
$
|
278
|
|
|
$
|
187
|
|
|
67.4
|
%
|
|
Less: rabbi trust impact
|
1
|
|
|
(10)
|
|
|
11
|
|
|
104.2
|
%
|
|
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact
|
$
|
466
|
|
|
$
|
268
|
|
|
$
|
198
|
|
|
73.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Change
|
|
Costs incurred on behalf of managed and franchised properties
|
$
|
1,117
|
|
|
$
|
1,068
|
|
|
$
|
49
|
|
|
4.6
|
%
|
|
Less: rabbi trust impact
|
(15)
|
|
|
(11)
|
|
|
(4)
|
|
|
(42.3)
|
%
|
|
Costs incurred on behalf of managed and franchised properties excluding rabbi trust impact
|
$
|
1,102
|
|
|
$
|
1,057
|
|
|
$
|
45
|
|
|
4.3
|
%
|
Costs incurred on behalf of managed and franchised properties increased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by increased payroll and related expenses at managed properties where we are the employer and expenses related to system-wide services provided to managed and franchised properties due to hotels resuming operations after prior year suspensions and improved operating performance.
The increase in costs incurred on behalf of managed and franchised properties during the three months ended September 30, 2021, compared to the three months ended September 30, 2020, included an $11 million decrease in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to declines in market performance. The increase in costs incurred on behalf of managed and franchised properties during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, included a $4 million increase in the value of the marketable securities held to fund our deferred compensation plans through rabbi trusts due to improved market performance.
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Rabbi trust impact allocated to selling, general, and administrative expenses
|
$
|
(1)
|
|
|
$
|
19
|
|
|
$
|
(20)
|
|
|
(104.6)
|
%
|
|
Rabbi trust impact allocated to owned and leased hotels expenses
|
—
|
|
|
3
|
|
|
(3)
|
|
|
(103.5)
|
%
|
|
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts
|
$
|
(1)
|
|
|
$
|
22
|
|
|
$
|
(23)
|
|
|
(104.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Rabbi trust impact allocated to selling, general, and administrative expenses
|
$
|
30
|
|
|
$
|
20
|
|
|
$
|
10
|
|
|
51.3
|
%
|
|
Rabbi trust impact allocated to owned and leased hotels expenses
|
5
|
|
|
3
|
|
|
2
|
|
|
56.4
|
%
|
|
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts
|
$
|
35
|
|
|
$
|
23
|
|
|
$
|
12
|
|
|
52.0
|
%
|
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts decreased during the three months ended September 30, 2021, compared to the same period in the prior year, and increased during the nine months ended September 30, 2021, compared to the same period in the prior year, driven by the market performance of the underlying invested assets.
Equity earnings (losses) from unconsolidated hospitality ventures.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better /
(Worse)
|
|
2021
|
|
2020
|
|
Better /
(Worse)
|
|
Hyatt's share of unconsolidated hospitality ventures net losses excluding foreign currency
|
$
|
(14)
|
|
|
$
|
(20)
|
|
|
$
|
6
|
|
|
$
|
(48)
|
|
|
$
|
(35)
|
|
|
$
|
(13)
|
|
|
Net gains from sales activity related to unconsolidated hospitality ventures (Note 4)
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|
Hyatt's share of unconsolidated hospitality ventures foreign currency net gains (losses)
|
—
|
|
|
(3)
|
|
|
3
|
|
|
4
|
|
|
(17)
|
|
|
21
|
|
|
Other
|
2
|
|
|
3
|
|
|
(1)
|
|
|
(16)
|
|
|
7
|
|
|
(23)
|
|
|
Equity earnings (losses) from unconsolidated hospitality ventures
|
$
|
(12)
|
|
|
$
|
(20)
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
(45)
|
|
|
$
|
53
|
|
|
|
|
|
The increase in equity earnings (losses) from unconsolidated hospitality ventures during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by a pre-tax gain as we purchased our partner's interest in the entities that own Grand Hyatt São Paulo. See Part I, Item 1 "Financial Statements—Note 6 to the Condensed Consolidated Financial Statements" for additional information. The increases were partially offset by debt repayment guarantees for the hotel properties in India that we entered into during 2021. See Part I, Item 1 "Financial Statements—Note 12 to the Condensed Consolidated Financial Statements" for additional information.
Interest expense. Interest expense increased $5 million and $36 million during the three and nine months ended September 30, 2021, respectively, compared to the same periods in the prior year, primarily driven by the 2022 Notes issued during the third quarter of 2020. Interest expense during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, also increased due to the 2025 Notes and 2030 Notes issued during the second quarter of 2020. See Part I, Item 1 "Financial Statements—Note 9 to the Condensed Consolidated Financial Statements" for additional information.
Gains on sales of real estate and other. During the three and nine months ended September 30, 2021, we recognized a $305 million pre-tax gain related to the sale of Hyatt Regency Lake Tahoe Resort, Spa and Casino and a $2 million pre-tax gain related to the sale of Alila Ventana Big Sur. During the nine months ended September 30, 2021, we also recognized a $104 million pre-tax gain related to the sale of Hyatt Regency Lost Pines Resort and Spa.
During the nine months ended September 30, 2020, we recognized a $4 million pre-tax gain related to an unrelated third-party's investment in certain of our subsidiaries that developed Hyatt Centric Center City Philadelphia and adjacent parking and retail space and a $4 million pre-tax gain for the sale of a commercial building in Omaha, Nebraska. See Part I, Item 1 "Financial Statements—Note 6 to the Condensed Consolidated Financial Statements" for additional information.
Asset impairments. Asset impairments decreased $50 million during the nine months ended September 30, 2021 compared to the same period in the prior year. During the nine months ended September 30, 2020, we recognized $38 million of goodwill impairment charges and $14 million of impairment charges related to property and equipment, operating lease right-of-use assets, and definite-lived intangibles.
Other income (loss), net. Other income (loss), net increased $16 million and $148 million during the three and nine months ended September 30, 2021, respectively, compared to the same periods in the prior year. See Part I, Item 1 "Financial Statements—Note 18 to the Condensed Consolidated Financial Statements" for additional information.
Benefit (provision) for income taxes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Income (loss) before income taxes
|
$
|
258
|
|
|
$
|
(220)
|
|
|
$
|
478
|
|
|
217.2
|
%
|
|
Benefit (provision) for income taxes
|
(138)
|
|
|
59
|
|
|
(197)
|
|
|
(333.9)
|
%
|
|
Effective tax rate
|
53.5
|
%
|
|
26.8
|
%
|
|
|
|
(26.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Income (loss) before income taxes
|
$
|
146
|
|
|
$
|
(688)
|
|
|
$
|
834
|
|
|
121.2
|
%
|
|
Benefit (provision) for income taxes
|
(339)
|
|
|
188
|
|
|
(527)
|
|
|
(280.1)
|
%
|
|
Effective tax rate
|
232.6
|
%
|
|
27.3
|
%
|
|
|
|
(205.3)
|
%
|
For the three and nine months ended September 30, 2021, we recognized an income tax provision of $138 million and $339 million, respectively, primarily driven by the tax impact of the sale of Hyatt Regency Lake Tahoe Resort, Spa and Casino combined with a full valuation allowance on U.S. federal and state deferred tax assets and unbenefited foreign losses. See Part I, Item 1 "Financial Statements—Note 11 to the Condensed Consolidated Financial Statements."
Segment Results
As described in Part I, Item 1 "Financial Statements—Note 16 to the Condensed Consolidated Financial Statements," we evaluate segment operating performance using owned and leased hotels revenues; management, franchise, and other fees revenues; and Adjusted EBITDA.
Our segment revenues, comparable RevPAR, and Adjusted EBITDA during the three and nine months ended September 30, 2021 continue to be impacted by the COVID-19 pandemic, and performance remains significantly below pre-COVID-19 pandemic results. We have seen improvement in the third quarter of 2021 across most segments as compared to the second quarter, but the level of recovery has varied by market.
Owned and leased hotels segment revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Currency Impact
|
|
Comparable owned and leased hotels revenues
|
$
|
225
|
|
|
$
|
51
|
|
|
$
|
174
|
|
|
339.8
|
%
|
|
$
|
—
|
|
|
Non-comparable owned and leased hotels revenues
|
43
|
|
|
31
|
|
|
12
|
|
|
38.6
|
%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenues
|
$
|
268
|
|
|
$
|
82
|
|
|
$
|
186
|
|
|
226.9
|
%
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Currency Impact
|
|
Comparable owned and leased hotels revenues
|
$
|
476
|
|
|
$
|
350
|
|
|
$
|
126
|
|
|
36.1
|
%
|
|
$
|
2
|
|
|
Non-comparable owned and leased hotels revenues
|
93
|
|
|
82
|
|
|
11
|
|
|
12.7
|
%
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenues
|
$
|
569
|
|
|
$
|
432
|
|
|
$
|
137
|
|
|
31.5
|
%
|
|
$
|
2
|
|
Comparable owned and leased hotels revenues increased during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, driven by increased demand and hotel re-openings.
Non-comparable owned and leased hotels revenues increased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by acquisitions in 2021 and two properties undergoing renovations during 2020, partially offset by disposition activity. Additionally, the aforementioned increase in non-comparable owned and leased hotels revenues during the nine months ended September 30, 2021, compared to the same period in the prior year, was partially offset by the extended closure of an owned hotel.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
Comparable owned and leased hotels
|
$
|
117
|
|
|
|
|
|
|
428.3
|
%
|
|
55.2
|
%
|
|
|
|
41.3% pts
|
|
$
|
212
|
|
|
|
|
|
|
32.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
Comparable owned and leased hotels
|
$
|
83
|
|
|
|
|
|
|
52.4
|
%
|
|
41.7
|
%
|
|
|
|
17.5% pts
|
|
$
|
198
|
|
|
|
|
|
|
(11.5)
|
%
|
The increase in RevPAR at our comparable owned and leased hotels during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, was primarily driven by improved leisure transient demand across various markets in the United States due to continued recovery from the COVID-19 pandemic. The three months ended September 30, 2021, compared to the same period in the prior year, also benefited from improved ADR.
During the three months ended September 30, 2021, we sold one property and it was removed from the comparable owned and leased hotels results. During the nine months ended September 30, 2021, we sold two properties and removed them from the comparable owned and leased hotels results, and we removed an additional property from the comparable owned and leased hotels results as the property has been closed for an extended period.
Owned and leased hotels segment Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Owned and leased hotels Adjusted EBITDA
|
$
|
42
|
|
|
$
|
(53)
|
|
|
$
|
95
|
|
|
179.8
|
%
|
|
Pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA
|
9
|
|
|
(3)
|
|
|
12
|
|
|
351.5
|
%
|
|
Segment Adjusted EBITDA
|
$
|
51
|
|
|
$
|
(56)
|
|
|
$
|
107
|
|
|
190.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
|
|
|
|
|
|
|
Owned and leased hotels Adjusted EBITDA
|
$
|
28
|
|
|
$
|
(93)
|
|
|
$
|
121
|
|
|
129.9
|
%
|
|
|
|
|
|
|
|
|
Pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA
|
6
|
|
|
(7)
|
|
|
13
|
|
|
182.2
|
%
|
|
|
|
|
|
|
|
|
Segment Adjusted EBITDA
|
$
|
34
|
|
|
$
|
(100)
|
|
|
$
|
134
|
|
|
133.7
|
%
|
|
|
|
|
|
|
|
Owned and leased hotels Adjusted EBITDA. The increases in Adjusted EBITDA at our owned and leased hotels for the three and nine months ended September 30, 2021, compared to the same periods in the prior year, were primarily driven by the aforementioned $174 million and $126 million increases in comparable owned and leased hotels revenues, respectively, partially offset by increases in comparable owned and leased expenses driven by variable expenses incurred due to higher demand and hotels re-opening in 2021. The nine months ended September 30, 2021, compared to the same period in the prior year, further benefited from a decrease in non-comparable owned and leased hotels expenses largely related to the extended closure of an owned hotel.
Pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA. Our pro rata share of Adjusted EBITDA from our unconsolidated hospitality ventures increased during the three and nine months ended September 30, 2021, compared to the same periods in 2020, primarily driven by the increased demand during 2021 due to continued recovery from the COVID-19 pandemic.
Americas management and franchising segment revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment revenues
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
85
|
|
|
$
|
29
|
|
|
$
|
56
|
|
|
198.4
|
%
|
|
Contra revenue
|
(5)
|
|
|
(5)
|
|
|
—
|
|
|
(17.3)
|
%
|
|
Other revenues
|
24
|
|
|
4
|
|
|
20
|
|
|
483.3
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
412
|
|
|
234
|
|
|
178
|
|
|
76.0
|
%
|
|
Total segment revenues
|
$
|
516
|
|
|
$
|
262
|
|
|
$
|
254
|
|
|
96.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment revenues
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
189
|
|
|
$
|
121
|
|
|
$
|
68
|
|
|
57.0
|
%
|
|
Contra revenue
|
(14)
|
|
|
(13)
|
|
|
(1)
|
|
|
(10.1)
|
%
|
|
Other revenues
|
60
|
|
|
33
|
|
|
27
|
|
|
82.2
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
966
|
|
|
904
|
|
|
62
|
|
|
6.9
|
%
|
|
Total segment revenues
|
$
|
1,201
|
|
|
$
|
1,045
|
|
|
$
|
156
|
|
|
15.0
|
%
|
The increases in management, franchise, and other fees for the three and nine months ended September 30, 2021, compared to the same periods in the prior year, were primarily driven by increases in management fees from improved demand during 2021 due to continued recovery from the COVID-19 pandemic, which was led by certain markets in the United States, particularly resort destinations, and increases in franchise fees from select service properties. Additionally, during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, other fees declined due to the recognition of license fees in 2020 associated with an amended license agreement for Hyatt Residence Club, which was largely offset by an increase in termination fees.
The increases in other revenues for the three and nine months ended September 30, 2021, compared to the same periods in the prior year, were driven by increased demand in our residential management business during 2021 due to continued recovery from the COVID-19 pandemic.
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties increased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by higher reimbursements for payroll and related costs and system-wide services provided to managed and franchised properties due to hotels resuming operations after prior year suspensions and improved hotel operating performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
(Comparable System-wide Hotels)
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
Americas full service
|
$
|
114
|
|
|
|
|
|
|
303.1
|
%
|
|
53.9
|
%
|
|
|
|
35.8% pts
|
|
$
|
212
|
|
|
|
|
|
|
35.1
|
%
|
|
Americas select service
|
$
|
94
|
|
|
|
|
|
|
102.4
|
%
|
|
68.7
|
%
|
|
|
|
24.8% pts
|
|
$
|
137
|
|
|
|
|
|
|
29.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
(Comparable System-wide Hotels)
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
Americas full service
|
$
|
80
|
|
|
|
|
|
|
60.3
|
%
|
|
40.9
|
%
|
|
|
|
15.2% pts
|
|
$
|
196
|
|
|
|
|
|
|
0.6
|
%
|
|
Americas select service
|
$
|
73
|
|
|
|
|
|
|
54.2
|
%
|
|
60.4
|
%
|
|
|
|
20.0% pts
|
|
$
|
121
|
|
|
|
|
|
|
3.2
|
%
|
The RevPAR increases at our comparable system-wide full service and select service hotels during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, were primarily driven by leisure transient demand, due to continued recovery from the COVID-19 pandemic. The three months ended September 30, 2021 also benefited from increases in ADR as compared to the same period in the prior year.
During the three and nine months ended September 30, 2021, one property was removed from the comparable Americas full service system-wide hotel results, and two properties were removed from the comparable Americas select service system-wide hotel results as the properties left the chain. Additionally, during the nine months ended September 30, 2021, four properties were removed from the comparable Americas full service system-wide hotel results as one is undergoing a significant renovation, one has been closed for an extended period, and two left the chain, and five properties were removed from the comparable Americas select service system-wide hotel results as they left the chain.
Americas management and franchising segment Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment Adjusted EBITDA
|
$
|
74
|
|
|
$
|
16
|
|
|
$
|
58
|
|
|
367.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment Adjusted EBITDA
|
$
|
156
|
|
|
$
|
81
|
|
|
$
|
75
|
|
|
92.8
|
%
|
The increases in Adjusted EBITDA during the three and nine months ended September 30, 2021, compared to the same periods in the prior year, were primarily driven by the aforementioned increases in management and franchise fees.
ASPAC management and franchising segment revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment revenues
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
16
|
|
|
$
|
17
|
|
|
$
|
(1)
|
|
|
(1.8)
|
%
|
|
Contra revenue
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
(58.1)
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
26
|
|
|
18
|
|
|
8
|
|
|
34.6
|
%
|
|
Total segment revenues
|
$
|
41
|
|
|
$
|
35
|
|
|
$
|
6
|
|
|
16.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment revenues
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
51
|
|
|
$
|
42
|
|
|
$
|
9
|
|
|
23.0
|
%
|
|
Contra revenue
|
(3)
|
|
|
(2)
|
|
|
(1)
|
|
|
(50.2)
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
70
|
|
|
62
|
|
|
8
|
|
|
11.6
|
%
|
|
Total segment revenues
|
$
|
118
|
|
|
$
|
102
|
|
|
$
|
16
|
|
|
15.6
|
%
|
Management, franchise, and other fees increased for the nine months ended September 30, 2021, compared to the same period in the prior year, primarily driven by an increase in base and incentive management fees in Greater China due to improved domestic demand, partially offset by a decrease in license fees from the sale of branded residential ownership units.
The increases in revenues for the reimbursement of costs incurred on behalf of managed and franchised properties during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, were driven by higher reimbursements related to system-wide services provided to managed and franchised properties due to improved operating performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
(Comparable System-wide Hotels)
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
ASPAC full service
|
$
|
64
|
|
|
|
|
|
|
5.7
|
%
|
|
40.2
|
%
|
|
|
|
(2.1)% pts
|
|
$
|
159
|
|
|
|
|
|
|
11.2
|
%
|
|
ASPAC select service
|
$
|
36
|
|
|
|
|
|
|
(4.1)
|
%
|
|
50.0
|
%
|
|
|
|
(5.9)% pts
|
|
$
|
72
|
|
|
|
|
|
|
7.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
(Comparable System-wide Hotels)
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
ASPAC full service
|
$
|
65
|
|
|
|
|
|
|
20.0
|
%
|
|
41.6
|
%
|
|
|
|
8.2% pts
|
|
$
|
155
|
|
|
|
|
|
|
(3.5)
|
%
|
|
ASPAC select service
|
$
|
38
|
|
|
|
|
|
|
42.8
|
%
|
|
53.9
|
%
|
|
|
|
16.2% pts
|
|
$
|
71
|
|
|
|
|
|
|
(0.2)
|
%
|
Comparable full service RevPAR increased for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, primarily driven by an increase in ADR as compared to the prior year, which was negatively affected by the COVID-19 pandemic, as well as modest increases in demand from certain markets, including Tokyo which hosted the Olympics.
Comparable full and select service RevPAR increased for the nine months ended September 30, 2021, compared to the same period in the prior year, primarily driven by increased transient demand led by Greater China during 2021 due to continued recovery from the COVID-19 pandemic.
During the three and nine months ended September 30, 2021, one property was removed from the comparable ASPAC full service system-wide hotel results as it is undergoing a significant renovation. During the three months ended September 30, 2021, no properties were removed from the comparable ASPAC select service system-wide hotel results. Additionally, during the nine months ended September 30, 2021, one property was removed from the comparable ASPAC full service system-wide hotel results, and one property was removed from the ASPAC select service system-wide hotel results as the properties left the chain.
ASPAC management and franchising segment Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment Adjusted EBITDA
|
$
|
6
|
|
|
$
|
9
|
|
|
$
|
(3)
|
|
|
(26.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment Adjusted EBITDA
|
$
|
21
|
|
|
$
|
15
|
|
|
$
|
6
|
|
|
42.8
|
%
|
The increase in Adjusted EBITDA during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by the aforementioned increases in management, franchise, and other fees revenues, partially offset by increased selling, general, and administrative expenses, primarily payroll and related costs due to cost containment initiatives, in 2020.
EAME/SW Asia management and franchising segment revenues.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment revenues
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
12
|
|
|
$
|
5
|
|
|
$
|
7
|
|
|
125.9
|
%
|
|
Contra revenue
|
(3)
|
|
|
(2)
|
|
|
(1)
|
|
|
(68.1)
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
18
|
|
|
14
|
|
|
4
|
|
|
43.0
|
%
|
|
Total segment revenues
|
$
|
27
|
|
|
$
|
17
|
|
|
$
|
10
|
|
|
65.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment revenues
|
|
|
|
|
|
|
|
|
Management, franchise, and other fees
|
$
|
25
|
|
|
$
|
17
|
|
|
$
|
8
|
|
|
44.7
|
%
|
|
Contra revenue
|
(9)
|
|
|
(5)
|
|
|
(4)
|
|
|
(75.6)
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
46
|
|
|
46
|
|
|
—
|
|
|
2.4
|
%
|
|
Total segment revenues
|
$
|
62
|
|
|
$
|
58
|
|
|
$
|
4
|
|
|
8.5
|
%
|
The increases in management, franchise, and other fees during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, were driven by increases in base and incentive management fees across the region during 2021 due to continued recovery from the COVID-19 pandemic. The increases in management fees were led by Europe as travel restrictions eased toward the end of the second quarter leading to increased transient demand.
The increase in Contra revenue during the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, was primarily driven by an accrued performance cure payment.
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties increased during the three months ended September 30, 2021, compared to the same period in the prior year, primarily driven by higher reimbursements related to system-wide services provided to managed and franchised properties due to improved hotel operating performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
(Comparable System-wide Hotels)
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
EAME/SW Asia full service
|
$
|
83
|
|
|
|
|
|
|
162.6
|
%
|
|
47.0
|
%
|
|
|
|
28.6% pts
|
|
$
|
178
|
|
|
|
|
|
|
3.0
|
%
|
|
EAME/SW Asia select service
|
$
|
46
|
|
|
|
|
|
|
106.7
|
%
|
|
60.0
|
%
|
|
|
|
29.6% pts
|
|
$
|
76
|
|
|
|
|
|
|
4.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
RevPAR
|
|
Occupancy
|
|
ADR
|
|
(Comparable System-wide Hotels)
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
2021
|
|
|
|
vs. 2020
|
|
2021
|
|
|
|
|
|
vs. 2020
(in constant $)
|
|
EAME/SW Asia full service
|
$
|
55
|
|
|
|
|
|
|
30.3
|
%
|
|
34.9
|
%
|
|
|
|
10.4% pts
|
|
$
|
158
|
|
|
|
|
|
|
(8.5)
|
%
|
|
EAME/SW Asia select service
|
$
|
34
|
|
|
|
|
|
|
18.1
|
%
|
|
49.4
|
%
|
|
|
|
14.8% pts
|
|
$
|
69
|
|
|
|
|
|
|
(17.2)
|
%
|
Comparable system-wide hotels RevPAR increased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by increased demand as various travel and movement restrictions were lifted during 2021 due to continued recovery from the COVID-19 pandemic. The RevPAR increases were primarily driven by leisure destinations in Europe, which benefited from a strong summer, and the Middle East, which has experienced steady recovery as restrictions on international travel have eased.
During the three and nine months ended September 30, 2021, two properties were removed from the comparable EAME/SW Asia full service system-wide hotel results as one was undergoing a renovation and one was closed for an extended period. During the three months ended September 30, 2021, no properties were removed from the comparable EAME/SW Asia select service system-wide hotel results, and during the nine months ended September 30, 2021, one property was removed from the comparable EAME/SW Asia select service system-wide hotel results as it left the chain.
EAME/SW Asia management and franchising segment Adjusted EBITDA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment Adjusted EBITDA
|
$
|
5
|
|
|
$
|
(2)
|
|
|
$
|
7
|
|
|
374.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Segment Adjusted EBITDA
|
$
|
4
|
|
|
$
|
(12)
|
|
|
$
|
16
|
|
|
134.3
|
%
|
During the three months ended September 30, 2021, compared to the three months ended September 30, 2020, Adjusted EBITDA increased primarily due to the aforementioned increases in management, franchise, and other fees revenues.
The increase in Adjusted EBITDA during the nine months ended September 30, 2021, compared to the same period in the prior year, was primarily driven by reduced selling, general, and administrative expenses due to reserves recognized on certain receivables in the prior year as well as the aforementioned increases in management, franchise, and other fees revenues in the current year.
Corporate and other.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Revenues
|
$
|
14
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
102.8
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
—
|
|
|
1
|
|
|
(1)
|
|
|
(100.0)
|
%
|
|
Adjusted EBITDA
|
(26)
|
|
|
(15)
|
|
|
(11)
|
|
|
(73.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Better / (Worse)
|
|
Revenues
|
$
|
33
|
|
|
$
|
25
|
|
|
$
|
8
|
|
|
30.3
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
—
|
|
|
3
|
|
|
(3)
|
|
|
(100.0)
|
%
|
|
Adjusted EBITDA
|
(71)
|
|
|
(65)
|
|
|
(6)
|
|
|
(9.2)
|
%
|
Revenues increased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by license fees related to our co-branded credit card, partially offset by the sale of the Exhale spa and fitness business during the fourth quarter of 2020
Adjusted EBITDA decreased during the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020, primarily driven by increases in certain selling, general, administrative expenses, including payroll and related costs, due to cost containment initiatives in 2020, partially offset by reduced expenses due to the sale of the Exhale spa and fitness business during the fourth quarter of 2020.
Non-GAAP Measures
Adjusted Earnings Before Interest Expense, Taxes, Depreciation, and Amortization ("Adjusted EBITDA") and EBITDA
We use the terms Adjusted EBITDA and EBITDA throughout this quarterly report. Adjusted EBITDA and EBITDA, as we define them, are non-GAAP measures. We define consolidated Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus our pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA based on our ownership percentage of each owned and leased venture, adjusted to exclude the following items:
•interest expense;
•benefit (provision) for income taxes;
•depreciation and amortization;
•Contra revenue;
•revenues for the reimbursement of costs incurred on behalf of managed and franchised properties;
•costs incurred on behalf of managed and franchised properties that we intend to recover over the long term;
•equity earnings (losses) from unconsolidated hospitality ventures;
•stock-based compensation expense;
•gains on sales of real estate and other;
•asset impairments; and
•other income (loss), net.
We calculate consolidated Adjusted EBITDA by adding the Adjusted EBITDA of each of our reportable segments and eliminations to corporate and other Adjusted EBITDA.
Our board of directors and executive management team focus on Adjusted EBITDA as a key performance and compensation measure both on a segment and on a consolidated basis. Adjusted EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations both on a segment and on a consolidated basis. Our President and Chief Executive Officer, who is our CODM, also evaluates the performance of each of our reportable segments and determines how to allocate resources to those segments, in significant part, by assessing the Adjusted EBITDA of each segment. In addition, the compensation committee of our board of directors determines the annual variable compensation for certain members of our management based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA, or some combination of both.
We believe Adjusted EBITDA is useful to investors because it provides investors the same information that we use internally for purposes of assessing our operating performance and making compensation decisions and facilitates our comparison of results before these items with results from other companies within our industry.
Adjusted EBITDA excludes certain items that can vary widely across different industries and among companies within the same industry. For instance, interest expense and benefit (provision) for income taxes are dependent upon company specifics, including capital structure, credit ratings, tax policies, and jurisdictions in which they operate, and therefore, can vary significantly across companies. Depreciation and amortization are dependent on company policies, including how the assets are utilized as well as the lives assigned to the assets, and Contra revenue is dependent on company policies and strategic decisions regarding payments to hotel owners. We exclude revenues for the reimbursement of costs and costs incurred on behalf of managed and franchised properties which relate to the reimbursement of payroll costs and system-wide services and programs that we operate for the benefit of our hotel owners as contractually we do not provide services or operate the related programs to generate a profit over the terms of the respective contracts. Over the long term, these programs and services are not designed to impact our economics, either positively or negatively. Therefore, we exclude the net impact when evaluating period-over-period changes in our operating results. Adjusted EBITDA includes costs incurred on behalf of our managed and franchised properties related to system-wide services and programs that we do not intend to recover from hotel owners. We exclude stock-based compensation expense to remove the variability amongst companies resulting from different compensation plans companies have adopted. Finally, we exclude other items that are not core to our operations, such as asset impairments and unrealized and realized gains and losses on marketable securities.
Adjusted EBITDA and EBITDA are not substitutes for net income (loss) attributable to Hyatt Hotels Corporation, net income (loss), or any other measure prescribed by GAAP. There are limitations to using non-GAAP measures such as Adjusted EBITDA and EBITDA. Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our core operations, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income generated by our business. Our management compensates for these limitations by reference to our GAAP results and using Adjusted EBITDA supplementally. See our condensed consolidated statements of income (loss) in our condensed consolidated financial statements included elsewhere in this quarterly report.
See below for a reconciliation of net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA.
Adjusted selling, general, and administrative expenses
Adjusted selling, general, and administrative expenses, as we define it, is a non-GAAP measure. Adjusted selling, general, and administrative expenses exclude the impact of deferred compensation plans funded through rabbi trusts and stock-based compensation expense. Adjusted selling, general, and administrative expenses assist us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations, both on a segment and consolidated basis. See "—Results of Operations" for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
Comparable hotels
"Comparable system-wide hotels" represents all properties we manage or franchise (including owned and leased properties) and that are operated for the entirety of the periods being compared and that have not sustained substantial damage, business interruption, or undergone large scale renovations during the periods being compared or for which comparable results are not available. Hotels that have temporarily suspended operations due to the COVID-19 pandemic are included in our definition of comparable system-wide hotels. We may use variations of comparable system-wide hotels to specifically refer to comparable system-wide Americas full service or select service hotels for those properties that we manage or franchise within the Americas management and franchising segment, comparable system-wide ASPAC full service or select service hotels for those properties we manage or franchise within the ASPAC management and franchising segment, or comparable system-wide EAME/SW Asia full service or select service hotels for those properties that we manage or franchise within the EAME/SW Asia management and franchising segment. "Comparable owned and leased hotels" represents all properties we own or lease and that are operated and consolidated for the entirety of the periods being compared and have not sustained substantial damage, business interruption, or undergone large scale renovations during the periods being compared or for which comparable results are not available. Hotels that have temporarily suspended operations due to the COVID-19 pandemic are included in our definition of comparable owned and leased hotels. Comparable system-wide hotels and comparable owned and leased hotels are commonly used as a basis of measurement in our industry. "Non-comparable system-wide hotels" or "non-comparable owned and leased hotels" represent all hotels that do not meet the respective definition of "comparable" as defined above.
Constant dollar currency
We report the results of our operations both on an as-reported basis, as well as on a constant dollar basis. Constant dollar currency, which is a non-GAAP measure, excludes the effects of movements in foreign currency exchange rates between comparative periods. We believe constant dollar analysis provides valuable information regarding our results as it removes currency fluctuations from our operating results. We calculate constant dollar currency by restating prior-period local currency financial results at the current period's exchange rates. These restated amounts are then compared to our current period reported amounts to provide operationally driven variances in our results.
The table below provides a reconciliation of our net income (loss) attributable to Hyatt Hotels Corporation to EBITDA and a reconciliation of EBITDA to consolidated Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
2021
|
|
2020
|
|
Change
|
|
Net income (loss) attributable to Hyatt Hotels Corporation
|
$
|
120
|
|
|
$
|
(161)
|
|
|
$
|
281
|
|
|
174.5
|
%
|
|
Interest expense
|
40
|
|
|
35
|
|
|
5
|
|
|
13.4
|
%
|
|
(Benefit) provision for income taxes
|
138
|
|
|
(59)
|
|
|
197
|
|
|
333.9
|
%
|
|
Depreciation and amortization
|
71
|
|
|
80
|
|
|
(9)
|
|
|
(9.9)
|
%
|
|
EBITDA
|
369
|
|
|
(105)
|
|
|
474
|
|
|
451.3
|
%
|
|
Contra revenue
|
9
|
|
|
7
|
|
|
2
|
|
|
34.3
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
(456)
|
|
|
(267)
|
|
|
(189)
|
|
|
(71.0)
|
%
|
|
Costs incurred on behalf of managed and franchised properties
|
465
|
|
|
278
|
|
|
187
|
|
|
67.4
|
%
|
|
Equity (earnings) losses from unconsolidated hospitality ventures
|
12
|
|
|
20
|
|
|
(8)
|
|
|
(43.8)
|
%
|
|
Stock-based compensation expense
|
6
|
|
|
3
|
|
|
3
|
|
|
107.5
|
%
|
|
Gains on sales of real estate and other
|
(307)
|
|
|
—
|
|
|
(307)
|
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
Other (income) loss, net
|
3
|
|
|
19
|
|
|
(16)
|
|
|
(79.1)
|
%
|
|
Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA
|
9
|
|
|
(3)
|
|
|
12
|
|
|
351.5
|
%
|
|
Adjusted EBITDA
|
$
|
110
|
|
|
$
|
(48)
|
|
|
$
|
158
|
|
|
327.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
Change
|
|
Net income (loss) attributable to Hyatt Hotels Corporation
|
$
|
(193)
|
|
|
$
|
(500)
|
|
|
$
|
307
|
|
|
61.4
|
%
|
|
Interest expense
|
123
|
|
|
87
|
|
|
36
|
|
|
40.9
|
%
|
|
(Benefit) provision for income taxes
|
339
|
|
|
(188)
|
|
|
527
|
|
|
280.1
|
%
|
|
Depreciation and amortization
|
219
|
|
|
233
|
|
|
(14)
|
|
|
(5.7)
|
%
|
|
EBITDA
|
488
|
|
|
(368)
|
|
|
856
|
|
|
232.5
|
%
|
|
Contra revenue
|
26
|
|
|
20
|
|
|
6
|
|
|
30.3
|
%
|
|
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties
|
(1,082)
|
|
|
(1,015)
|
|
|
(67)
|
|
|
(6.7)
|
%
|
|
Costs incurred on behalf of managed and franchised properties
|
1,117
|
|
|
1,068
|
|
|
49
|
|
|
4.6
|
%
|
|
Equity (earnings) losses from unconsolidated hospitality ventures
|
(8)
|
|
|
45
|
|
|
(53)
|
|
|
(118.0)
|
%
|
|
Stock-based compensation expense
|
42
|
|
|
20
|
|
|
22
|
|
|
109.4
|
%
|
|
Gains on sales of real estate and other
|
(412)
|
|
|
(8)
|
|
|
(404)
|
|
|
NM
|
|
Asset impairments
|
2
|
|
|
52
|
|
|
(50)
|
|
|
(95.4)
|
%
|
|
Other (income) loss, net
|
(34)
|
|
|
114
|
|
|
(148)
|
|
|
(129.8)
|
%
|
|
Pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA
|
6
|
|
|
(7)
|
|
|
13
|
|
|
182.2
|
%
|
|
Adjusted EBITDA
|
$
|
145
|
|
|
$
|
(79)
|
|
|
$
|
224
|
|
|
283.4
|
%
|
Liquidity and Capital Resources
Overview
We finance our business primarily with existing cash, short-term investments, and cash generated from our operations. As part of our long-term business strategy, we use net proceeds from dispositions to support new investment opportunities, including acquisitions, as well as return capital to our shareholders when appropriate. If we deem it necessary, we borrow cash under our revolving credit facility or from other third-party sources and raise funds by issuing debt or equity securities. We maintain a cash investment policy that emphasizes the preservation of capital.
The COVID-19 pandemic and related travel restrictions and other containment efforts have had a significant impact on the travel and lodging and hospitality industries and, as a result, on our business, results of operations, cash flows, and financial condition. During 2020, we raised capital by issuing debt securities and took significant actions to manage operating expenses and cash flows consistent with business needs and demand levels. We have been, and will continue to be, disciplined with respect to our operational spending.
In alignment with our long-term business strategy, on November 1, 2021, we completed the ALG acquisition and paid cash of $2.7 billion. The transaction was funded with a combination of cash on hand, $1 billion of proceeds from new debt, $575 million of proceeds from the common stock issuance, and $210 million of borrowings on the revolving credit facility. See Part I, Item 1 "Financial Statements—Note 19 to the Condensed Consolidated Financial Statements" for additional information.
We may, from time to time, seek to retire or purchase our outstanding equity and/or debt securities through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan or an accelerated share repurchase transaction. Such repurchases or exchanges, if any, will depend on prevailing market conditions, restrictions in our existing or future financing arrangements, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.
We believe that our cash position, short-term investments, and cash from operations, together with borrowing capacity under our revolving credit facility and our access to the capital markets, will be adequate to meet all of our funding requirements and capital deployment objectives in both the short term and long term.
Recent Transactions Affecting our Liquidity and Capital Resources
During the nine months ended September 30, 2021 and September 30, 2020, various transactions impacted our liquidity. See "—Sources and Uses of Cash."
Sources and Uses of Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
2021
|
|
2020
|
|
Cash provided by (used in):
|
|
|
|
|
Operating activities
|
$
|
209
|
|
|
$
|
(463)
|
|
|
Investing activities
|
738
|
|
|
(318)
|
|
|
Financing activities
|
300
|
|
|
1,527
|
|
|
Effect of exchange rate changes on cash
|
(3)
|
|
|
1
|
|
|
|
|
|
|
|
Net increase in cash, cash equivalents, and restricted cash
|
$
|
1,244
|
|
|
$
|
747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
Cash provided by (used in) operating activities increased $672 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. The increase was primarily due to improved performance across the portfolio driven by continued recovery from the COVID-19 pandemic, which contributed to increased working capital. Additionally, during the three months ended September 30, 2021, we received a $254 million refund from the IRS for a loss carryback claim allowed under the provision of the CARES Act.
Cash Flows from Investing Activities
During the nine months ended September 30, 2021:
•We received $343 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Lake Tahoe Resort, Spa and Casino.
•We received $309 million of net proceeds from the sale of marketable securities and short-term investments.
•We received $268 million of proceeds, net of closing costs and proration adjustments, from the sale of Hyatt Regency Lost Pines Resort and Spa.
•We received $25 million of proceeds from the sales activity related to certain equity method investments and the redemption of a HTM debt security.
•We acquired Alila Ventana Big Sur for $146 million of cash, net of closing costs and proration adjustments, and received $148 million of proceeds, net of closing costs and proration adjustments from the subsequent sale.
•We purchased our partner's interest in the entities that own Grand Hyatt São Paulo for $6 million of cash, and we repaid the $78 million third-party mortgage loan on the property.
•We invested $65 million in capital expenditures (see "—Capital Expenditures").
•We invested $28 million in unconsolidated hospitality ventures.
•We acquired land from an unrelated third party for $7 million of cash.
During the nine months ended September 30, 2020:
•We invested $223 million in net purchases of marketable securities and short-term investments.
•We invested $104 million in capital expenditures (see "—Capital Expenditures").
•We invested $57 million in unconsolidated hospitality ventures.
•We received $72 million of proceeds related to the disposition of a 58% ownership interest in certain subsidiaries that developed Hyatt Centric Center City Philadelphia and adjacent parking and retail space.
•We received $6 million of proceeds, net of closing costs and proration adjustments, from the sale of a commercial building in Omaha, Nebraska.
Cash Flows from Financing Activities
During the nine months ended September 30, 2021:
•We issued and sold 8,050,000 shares of Class A common stock and received $575 million of net proceeds, after deducting approximately $25 million of underwriting discounts and other offering expenses.
•We repaid our outstanding 2021 Notes at maturity for approximately $257 million, inclusive of $7 million of accrued interest.
During the nine months ended September 30, 2020:
•We issued our 2025 Notes and 2030 Notes and received approximately $890 million of net proceeds, after deducting $10 million of underwriting discounts and other offering expenses.
•We issued the 2022 Notes and received approximately $745 million of net proceeds, after deducting $5 million of underwriting discounts and other offering expenses.
•We repurchased 827,643 shares of Class A common stock for an aggregate purchase price of $69 million.
•We paid a quarterly $0.20 per share cash dividend on Class A and Class B common stock totaling $20 million.
•We borrowed and repaid $400 million on our revolving credit facility.
We define net debt as total debt less the total of cash and cash equivalents and short-term investments. We consider net debt and its components to be an important indicator of liquidity and a guiding measure of capital structure strategy. Net debt is a non-GAAP measure and may not be computed the same as similarly titled measures used by other companies. The following table provides a summary of our debt to capital ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
December 31, 2020
|
|
Consolidated debt (1)
|
$
|
2,988
|
|
|
$
|
3,244
|
|
|
Stockholders' equity
|
3,586
|
|
|
3,211
|
|
|
Total capital
|
6,574
|
|
|
6,455
|
|
|
Total debt to total capital
|
45.5
|
%
|
|
50.3
|
%
|
|
Consolidated debt (1)
|
2,988
|
|
|
3,244
|
|
|
Less: cash and cash equivalents and short-term investments
|
(2,775)
|
|
|
(1,882)
|
|
|
Net consolidated debt
|
$
|
213
|
|
|
$
|
1,362
|
|
|
Net debt to total capital
|
3.2
|
%
|
|
21.1
|
%
|
(1) Excludes approximately $633 million and $671 million of our share of unconsolidated hospitality venture indebtedness at September 30, 2021 and December 31, 2020, respectively, substantially all of which is non-recourse to us and a portion of which we guarantee pursuant to separate agreements.
Capital Expenditures
We routinely make capital expenditures to enhance our business. We classify our capital expenditures into maintenance and technology, enhancements to existing properties, and investment in new properties under development or recently opened. We have been, and will continue to be, disciplined with respect to our capital spending, taking into account our cash flow from operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
2021
|
|
2020
|
|
Enhancements to existing properties
|
$
|
42
|
|
|
$
|
52
|
|
|
Maintenance and technology
|
23
|
|
|
19
|
|
|
Investment in new properties under development or recently opened
|
—
|
|
|
33
|
|
|
Total capital expenditures
|
$
|
65
|
|
|
$
|
104
|
|
In response to the COVID-19 pandemic and its impact to our business, we have taken actions to reduce capital expenditures. We expect to maintain conservative levels of capital expenditures during 2021 due to a
continuation of demand pressure resulting from the COVID-19 pandemic. The decrease in enhancements to existing properties is driven by a decrease in discretionary hotel renovations. The decrease in investment in new properties under development or recently opened is primarily driven by a decrease in renovation spend at a Miraval property.
Senior Notes
The table below sets forth the outstanding principal balance of our Senior Notes at September 30, 2021, as described in Part I, Item 1 "Financial Statements—Note 9 to the Condensed Consolidated Financial Statements." Interest on the Senior Notes is payable semi-annually or quarterly. On October 1, 2021, we issued senior notes with an aggregate principal amount of $1.75 billion, and on October 15, 2021, we redeemed the 2022 Notes. See Part I, Item 1, "Financial Statements—Note 19 to the Condensed Consolidated Financial Statements."
|
|
|
|
|
|
|
|
|
Principal amount
|
|
2022 Notes
|
$
|
750
|
|
|
2023 Notes
|
350
|
|
|
2025 Notes
|
450
|
|
|
2026 Notes
|
400
|
|
|
2028 Notes
|
400
|
|
|
2030 Notes
|
450
|
|
|
Total Senior Notes
|
$
|
2,800
|
|
We are in compliance with all applicable covenants under the indenture governing our Senior Notes at September 30, 2021.
Revolving Credit Facility
The revolving credit facility is intended to provide financing for working capital and general corporate purposes, including permitted investments and acquisitions. At both September 30, 2021 and December 31, 2020, we had no balance outstanding. See Part I, Item 1 "Financial Statements—Note 9 to the Condensed Consolidated Financial Statements."
We are in compliance with all applicable covenants under the revolving credit facility at September 30, 2021.
On August 30, 2021, we entered into the Fourth Revolver Amendment and on March 18, 2021, we entered into the Third Revolver Amendment. See Part I, Item 1 "Financial Statements—Note 9 to the Condensed Consolidated Financial Statements" and our Current Reports on Form 8-K filed with the SEC on August 31, 2021 and March 22, 2021, respectively, both of which are incorporated in this quarterly report by reference, for more information related to the Fourth Revolver Amendment and the Third Revolver Amendment.
In connection with funding the acquisition of ALG that closed on November 1, 2021, we borrowed $210 million on the revolving credit facility. See Part I, Item 1 "Financial Statements—Note 19 to the Condensed Consolidated Financial Statements"
Letters of Credit
We issue letters of credit either under the revolving credit facility or directly with financial institutions. We had $272 million and $234 million in letters of credit issued directly with financial institutions outstanding at September 30, 2021 and December 31, 2020, respectively. At September 30, 2021, these letters of credit had weighted-average fees of approximately 160 basis points and a range of maturity of up to approximately three years.
Critical Accounting Policies and Estimates
Preparing financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have disclosed those estimates that we believe are critical and require complex judgment in their application in our 2020 Form 10-K, with additional considerations below.
Income Taxes
Judgment is required in assessing the future tax consequences of events that have been recognized in our condensed consolidated financial statements or tax returns (e.g., realization of deferred tax assets, changes in tax laws, or interpretations thereof). In addition, we are subject to examination of our income tax returns by the IRS and other tax authorities. A change in the assessment of the outcomes of such matters could materially impact our condensed consolidated financial statements.
We evaluate tax positions taken or expected to be taken on a tax return to determine whether they are "more likely than not" of being sustained assuming that the tax reporting positions will be examined by taxing authorities with full knowledge of all relevant information prior to recording the related tax benefit in our condensed consolidated financial statements. If a position does not meet the "more likely than not" standard, the benefit cannot be recognized. Assumptions, judgment, and the use of estimates are required in determining whether the "more likely than not" standard has been met when developing the provision for income taxes. A change in the assessment of the "more likely than not" standard with respect to a position could materially impact our condensed consolidated financial statements. See Part I, Item 1, "Financial Statements—Note 11 to our Condensed Consolidated Financial Statements."
Deferred Income Taxes – Valuation Allowance
On a quarterly basis, we assess the realizability of our deferred tax assets and recognize a valuation allowance when it is "more likely than not" that some or all of our deferred tax assets are not realizable. This assessment is completed by tax jurisdiction and relies on the weight of both positive and negative evidence available with significant weight placed on recent financial results. Cumulative pre-tax losses for the three-year period are considered significant objective negative evidence that some or all of our deferred tax assets may not be realizable. Cumulative reported pre-tax income is considered objectively verifiable positive evidence of our ability to generate positive pre-tax income in the future. In accordance with GAAP, when there is a recent history of pre-tax losses, there is little or no weight placed on forecasts for purposes of assessing the recoverability of our deferred tax assets. When necessary, we use systematic and logical methods to estimate when deferred tax liabilities will reverse and generate taxable income and when deferred tax assets will reverse and generate tax deductions. Assumptions, judgment, and the use of estimates are required when scheduling the reversal of deferred tax assets and liabilities, and the exercise is inherently complex and subjective.
We generated significant pre-tax losses in 2020 due to the impact of the COVID-19 pandemic, and during the three months ended March 31, 2021, we entered into a three-year U.S. cumulative loss position. We expect the cumulative three-year loss position may continue in 2021 as 2018 pre-tax income is replaced by 2021 results. As a result of our three-year U.S. cumulative loss and the scheduling estimates discussed above, we recognized a $176 million valuation allowance during the nine months ended September 30, 2021. If we continue to generate losses in future periods, additional valuation allowances may be required that could have an adverse impact on our net income (loss). When pre-tax income returns to normalized levels, we will consider the pre-tax income as positive evidence weighted within our analysis to evaluate the realizability of our U.S. deferred tax asset balances and determine whether a portion of the valuation allowance can be reversed. However, significant judgment will be required to determine the timing and amount of any reversal of the valuation allowance in future periods. See Part I, Item 1, "Financial Statements—Note 11 to our Condensed Consolidated Financial Statements."