Adapting Operations to COVID-19 Pandemic
Environment
Greater China Continues to Lead
Recovery
Hyatt Hotels Corporation ("Hyatt" or the "Company") (NYSE: H)
today reported second-quarter 2020 financial results. Net loss
attributable to Hyatt was $236 million, or $2.33 per diluted share,
in the second quarter of 2020, compared to net income attributable
to Hyatt of $86 million, or $0.80 per diluted share, in the second
quarter of 2019. Adjusted net loss attributable to Hyatt was $183
million, or $1.80 per diluted share, in the second quarter of 2020,
compared to Adjusted net income attributable to Hyatt of $82
million, or $0.76 per diluted share, in the second quarter of 2019.
Refer to the table on page 13 of the schedules for a summary of
special items impacting Adjusted net income (loss) and Adjusted
earnings (losses) per share in the three months ended June 30,
2020.
Mark S. Hoplamazian, president and chief executive officer of
Hyatt Hotels Corporation, said, "I want to thank our colleagues
around the world for their exceptional work under the most
difficult of circumstances over the past several months. During
these unprecedented times, we are unwavering in our commitment to
living our purpose to care for our colleagues, guests, owners and
communities across the globe. Our purpose guides us to focus on
health and safety and to drive policies and programs that create
opportunity for all as we reimagine how we operate during the
COVID-19 pandemic."
Second quarter of 2020 highlights as compared to the second
quarter of 2019 are as follows:
- Net income (loss) decreased 376.0% to a net loss of $236
million.
- Adjusted EBITDA decreased 154.6% to $(117) million.
- Cash and cash equivalents of $1,438 million.
- Comparable system-wide RevPAR decreased 89.4%.
- Net rooms growth of 5.8%.
- Pipeline of executed management or franchise contracts for
approximately 101,000 rooms, an increase of approximately 9.8%
compared to the second quarter 2019.
Mr. Hoplamazian continued, "There remains uncertainty regarding
the full return of hotel demand to pre-COVID-19 levels. We are
encouraged by the demand progression we have seen in China and also
in certain markets in the U.S. and other parts of the world. Our
teams are prepared for varied recovery scenarios sustained by
continuously evolving new ways of operating that reduce the
occupancy levels that are required to break even at the hotel
operating level. Our balance sheet, including nearly $3 billion of
liquidity, is a great source of strength as is the support and
partnership of our hotel owner community. We continue to navigate
this dynamic situation, and expect to emerge stronger when the
pandemic subsides and demand returns."
OPERATIONAL UPDATE
The recovery in RevPAR has been mixed, as various parts of the
world remain subject to travel restrictions and quarantines which
continue to suppress demand and drive uncertainty surrounding the
pace and timing of recovery across individual markets. Comparable
system-wide RevPAR improved sequentially in each month after the
low point in April.
Greater China, where the impacts of the COVID-19 pandemic were
first reported, continues to lead the recovery. RevPAR in Greater
China has shown continued improvement since May, with preliminary
estimates indicating occupancy reaching approximately 57% at the
end of July. Excluding Hong Kong, Macau, and Taiwan, preliminary
estimates indicate occupancy in China reached approximately 65% at
the end of July.
The recovery in Greater China and certain markets within the
Americas and EAME/SW Asia regions is being led by strength in
leisure transient demand.
Hyatt continues to re-open hotels where operations had been
suspended. As of July 31, 2020, approximately 87% of total
system-wide hotels were open compared to approximately 65% of total
system-wide hotels as of April 30, 2020. Approximately 75% of full
service hotels and 96% of select service hotels in the Americas,
70% of hotels in the EAME/SW Asia region, and 92% of hotels in the
ASPAC region were open. All but one of our full and select service
hotels in Greater China were open. Approximately 69% of owned and
leased hotels were open.
For the month of July 2020, preliminary estimates indicate
RevPAR decreased approximately 76% for all comparable system-wide
hotels compared to July of 2019 reflecting the ongoing impact of
the pandemic. RevPAR statistics for Hyatt's comparable system-wide
hotels that were open during the period can be found on the
Company's website as 'Supplemental Data - Comparable Open Hotel
RevPAR' at investors.hyatt.com under the quarterly earnings
section. This supplemental information includes the number of open
comparable system-wide hotels and open comparable hotel RevPAR
statistics by month, and the second quarter ended June 30,
2020.
SECOND QUARTER RESULTS
Second quarter of 2020 financial results as compared to the
second quarter of 2019 are as follows:
Management, Franchise and Other Fees
Total fee revenues were $20 million. Base management fees
decreased 89.1% to $8 million, and incentive management fees
decreased 103.9% to negative revenue of $2 million, reflecting a
reversal of incentive fees earned year to date. Franchise fees
decreased 85.1% to $6 million. Other fee revenues decreased 29.7%
to $8 million.
Americas Management and Franchising Segment
Americas management and franchising segment Adjusted EBITDA
decreased 103.0% (consistent in constant currency) to $(3) million.
At March 31, 2020, 51% of Hyatt's Americas full service hotels and
91% of Americas select service hotels were open, and throughout the
second quarter, operations started to resume, with 61% of Americas
full service hotels and 93% of Americas select service hotels open
at June 30, 2020.
Americas net rooms increased 4.5% compared to the second quarter
of 2019.
Southeast Asia, Greater China, Australia, South Korea, Japan
and Micronesia (ASPAC) Management and Franchising Segment
ASPAC management and franchising segment Adjusted EBITDA
decreased 108.3% (108.5% decrease in constant currency) to $(2)
million. At both March 31, 2020 and June 30, 2020, 88% of Hyatt's
ASPAC full and select service hotels were open.
ASPAC net rooms increased 9.9% compared to the second quarter of
2019.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia)
Management and Franchising Segment
EAME/SW Asia management and franchising segment Adjusted EBITDA
decreased 201.4% (208.5% decrease in constant currency) to $(11)
million. At March 31, 2020, 52% of Hyatt's EAME/SW Asia full and
select service hotels were open, and throughout the second quarter,
operations started to resume, with 61% of EAME/SW Asia full and
select service hotels open at June 30, 2020.
EAME/SW Asia net rooms increased 6.7% compared to the second
quarter of 2019.
Owned and Leased Hotels Segment
Total owned and leased hotels segment Adjusted EBITDA decreased
168.2% (168.6% decrease in constant currency) to $(78) million.
Owned and leased hotels segment results were heavily impacted by
the COVID-19 pandemic and also by dispositions in 2019. Refer to
the table on page 11 of the schedules for a detailed list of
portfolio changes and the year-over-year net impact to total owned
and leased hotels segment Adjusted EBITDA.
At March 31, 2020, 18% of Hyatt's owned and leased hotels were
open, and throughout the second quarter, operations started to
resume, with 45% of owned and leased hotels open at June 30,
2020.
Corporate and Other
Corporate and other Adjusted EBITDA increased 39.0% (consistent
in constant currency), reflecting a $14 million improvement. This
improvement was primarily due to reductions in payroll and related
costs as a result of cost containment initiatives in 2020 and
integration related costs incurred in 2019 associated with the
acquisition of Two Roads.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased 5.6%,
inclusive of rabbi trust impact and stock-based compensation.
Adjusted selling, general, and administrative expenses decreased
29.9%, or $24 million, primarily as a result of decreases in
payroll and related costs and integration related costs incurred in
2019 associated with the acquisition of Two Roads, partially offset
by an increase in bad debt expense in 2020. Refer to the table on
page 16 of the schedules for a reconciliation of selling, general,
and administrative expenses to Adjusted selling, general, and
administrative expenses.
OPENINGS AND FUTURE EXPANSION
Ten new hotels (or 1,879 rooms) opened in the second quarter of
2020, contributing to a 5.8% increase in net rooms compared to the
second quarter of 2019.
As of June 30, 2020 the Company had executed management or
franchise contracts for approximately 500 hotels (or approximately
101,000 rooms), unchanged from the quarter ended March 31,
2020.
SHARE REPURCHASE/DIVIDEND
There were no Class A or Class B shares repurchased during the
second quarter. The Company ended the second quarter with
38,114,681 Class A and 63,028,031 Class B shares issued and
outstanding.
The Company suspended all share repurchase activity effective
March 3, 2020, and suspended its quarterly dividend through the
first quarter of 2021.
BALANCE SHEET
As of June 30, 2020, the Company reported the following:
- Total debt of $2,500 million.
- Pro rata share of unconsolidated hospitality venture debt of
approximately $609 million, substantially all of which is
non-recourse to Hyatt and a portion of which Hyatt guarantees
pursuant to separate agreements.
- Cash and cash equivalents, including investments in
highly-rated money market funds and similar investments, of $1,438
million, restricted cash of $21 million, and short-term investments
of $65 million.
- Undrawn borrowing availability of $1,499 million under Hyatt's
revolving credit facility, net of letters of credit
outstanding.
The Company ended the second quarter of 2020 with a strong
balance sheet, following numerous actions to secure additional
access to liquidity and maintain financial flexibility. These
actions provide the Company with adequate existing liquidity to
fund operations for at least the next 36 months at second quarter
2020 demand levels.
SEGMENT REPORTING UPDATES
Effective January 1, 2020, we changed the strategic and
operational oversight for our Miraval properties, which were
previously evaluated as a distinct business by our chief operating
decision maker (CODM). The management fees from Miraval properties
are now reported in the Americas management and franchising
segment, and the operating results and financial position of
underlying hotel results are now reported in our owned and leased
hotels segment; the results of Miraval properties were previously
reported in corporate and other. In addition, the license fees we
receive from Hyatt Residence Club are now reported within our
Americas management and franchising segment due to changes in the
strategic oversight for these license agreements. The segment
changes have been reflected retrospectively to the three and six
months ended June 30, 2019.
In addition, effective January 1, 2020, we classified Miraval
wellness resorts as full service hotels. All schedules have been
updated to reflect this change to our properties and statistics
retrospectively to the three and six months ended June 30,
2019.
CONFERENCE CALL INFORMATION
The Company will hold an investor conference call tomorrow,
August 4, 2020, at 10:30 a.m. CT. All interested persons may listen
to a simultaneous webcast of the conference call, which may be
accessed through the Company's website at investors.hyatt.com, by
dialing 888.869.1189 in the United States or 706.643.5902
internationally using the passcode #9191796, or by registering
directly prior to the event by using our online registration link
provided below. For those unable to listen to the live broadcast, a
replay will be available from 1:30 p.m. CT on August 4, 2020
through August 6, 2020 at midnight by dialing 800.585.8367 in the
United States or 416.621.4642 internationally using the passcode
#9191796. Additionally, an archive of the webcast will be available
on the Company's website for 90 days.
Online registration:
http://www.directeventreg.com/registration/event/9191796
FORWARD-LOOKING STATEMENTS
Forward-Looking Statements in this press release, which are not
historical facts, are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements include statements about our plans, strategies, outlook,
occupancy, ADR and growth trends, market share, the number of
properties we expect to open in the future, the number of months of
operations our existing liquidity is expected to fund, the dollar
value of owned real estate we expect to sell and the timeline for
such sales, financial performance, prospects or future events and
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 short- and longer-term effects of the COVID-19
pandemic, including on the demand for travel, transient and group
business, and levels of consumer confidence; actions that
governments, businesses, and individuals take in response to the
COVID-19 pandemic or any future resurgence, including limiting or
banning travel; the impact of the COVID-19 pandemic and actions
taken in response to the COVID-19 pandemic or any future
resurgence, on global and regional economies, travel, and economic
activity, including the duration and magnitude of its impact on
unemployment rates and consumer discretionary spending; the ability
of third-party owners, franchisees or hospitality venture partners
to successfully navigate the impacts of the COVID-19 pandemic; the
pace of recovery following the COVID-19 pandemic or any future
resurgence; 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; levels of spending in business and leisure
segments as well as consumer confidence; declines in occupancy and
average daily rate; limited visibility with respect to future
bookings; loss of key personnel; domestic and international
political and geopolitical 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 or fear of such outbreaks, such as
the COVID-19 pandemic; 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 and common stock repurchase program and
quarterly dividend, including a reduction in or elimination 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; cyber incidents and information technology failures;
outcomes of legal or administrative proceedings; violations of
regulations or laws related to our franchising business; and other
risks discussed in the Company's filings with the SEC, including
our annual report on Form 10-K and Quarterly Report on Form 10-Q
filed on May 7, 2020, which filings are available from the SEC. 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. We caution you not to place
undue reliance on any forward-looking statements, which are made
only as of the date of this press release. 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.
NON-GAAP FINANCIAL MEASURES
The Company refers to certain financial measures that are not
recognized under U.S. generally accepted accounting principles
(GAAP) in this press release, including: net income (loss),
adjusted for special items; diluted earnings (losses) per share,
adjusted for special items; Adjusted EBITDA; Adjusted EBITDA
margin; and Adjusted SG&A. See the schedules to this earnings
release, including the "Definitions" section, for additional
information and reconciliations of such non-GAAP financial
measures.
AVAILABILITY OF INFORMATION ON HYATT'S
WEBSITE AND SOCIAL MEDIA CHANNELS
Investors and others should note that Hyatt routinely announces
material information to investors and the marketplace using U.S.
Securities and Exchange Commission (SEC) filings, press releases,
public conference calls, webcasts and the Hyatt Investor Relations
website. The Company uses these channels as well as social media
channels (e.g., the Hyatt Facebook account (facebook.com/hyatt);
the Hyatt Instagram account (instagram.com/hyatt/); the Hyatt
Twitter account (twitter.com/hyatt); the Hyatt LinkedIn account
(linkedin.com/company/hyatt/); and the Hyatt YouTube account
(youtube.com/user/hyatt) as a means of disclosing information about
the Company's business to our guests, customers, colleagues,
investors, and the public. While not all of the information that
the Company posts to the Hyatt Investor Relations website or on the
Company's social media channels is of a material nature, some
information could be deemed to be material. Accordingly, the
Company encourages investors, the media, and others interested in
Hyatt to review the information that it shares at the Investor
Relations link located at the bottom of the page on hyatt.com and
on the Company's social media channels. Users may automatically
receive email alerts and other information about the Company when
enrolling an email address by visiting "Sign up for Email Alerts"
in the "Investor Resources" section of Hyatt's website at
investors.hyatt.com.
ABOUT HYATT HOTELS CORPORATION
Hyatt Hotels Corporation, headquartered in Chicago, is a leading
global hospitality company offering 21 premier brands. As of June
30, 2020, the Company's portfolio included more than 900 hotel,
all-inclusive, and wellness resort properties in 65 countries
across six continents. The Company's purpose to care for people so
they can be their best informs its business decisions and growth
strategy and is intended to attract and retain top employees, build
relationships with guests and create value for shareholders. The
Company's subsidiaries develop, own, operate, manage, franchise,
license or provide services to hotels, resorts, branded residences,
vacation ownership properties, and fitness and spa locations,
including under the Park Hyatt®, Miraval®, Grand
Hyatt®, Alila®, Andaz®, The Unbound Collection
by Hyatt®, Destination®, Hyatt Regency®,
Hyatt®, Hyatt Ziva™, Hyatt Zilara™,
Thompson Hotels®, Hyatt Centric®, Caption by
Hyatt, Joie de Vivre®, Hyatt House®, Hyatt
Place®, tommie™, UrCove, Hyatt Residence
Club® and Exhale® brand names, and operates the World of
Hyatt® loyalty program that provides distinct benefits and
exclusive experiences to its valued members. For more information,
please visit www.hyatt.com.
The financial section of this release, including a
reconciliation of the Company’s presented non-GAAP measures to the
most directly comparable GAAP measures, is provided on the
Company's website at investors.hyatt.com.
Note: All RevPAR and ADR percentage changes are in constant
dollars. This release includes references to non-GAAP financial
measures. Refer to the definitions of the non-GAAP measures
presented beginning on page 18 and non-GAAP reconciliations
included in the schedule.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200803005747/en/
Investor Contact: Amanda Bryant, 312.780.5539
amanda.bryant@hyatt.com
Media Contact: Franziska Weber, 312.780.6106
franziska.weber@hyatt.com
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