Recovery Momentum Broadens and
Strengthens
Net Rooms Growth of 6.9%
Apple Leisure Group Acquisition
Complete
Hyatt Hotels Corporation ("Hyatt" or the "Company") (NYSE: H)
today reported third-quarter 2021 financial results. Net income
attributable to Hyatt was $120 million, or $1.15 per diluted share,
in the third quarter of 2021, compared to a net loss attributable
to Hyatt of $161 million, or $1.59 per diluted share, in the third
quarter of 2020. Adjusted net income attributable to Hyatt was $241
million, or $2.31 per diluted share, in the third quarter of 2021,
compared to Adjusted net loss attributable to Hyatt of $150
million, or $1.48 per diluted share, in the third quarter of 2020.
Refer to the table on page 11 of the schedules for a summary of
special items impacting Adjusted net income (loss) and Adjusted
earnings (losses) per share for the three months ended September
30, 2021 and September 30, 2020.
Mark S. Hoplamazian, president and chief executive officer of
Hyatt Hotels Corporation, said, "During the quarter, we again
produced results that exceeded expectations and demonstrated the
resilience of our business. Adjusted EBITDA for the third quarter
approached 70% of 2019 levels and more than doubled from the prior
quarter. Leisure demand continues to lead the recovery and momentum
for business and group travel is growing. The recovery is evident
in more markets as travel restrictions ease and borders
reopen."
Third quarter of 2021 highlights are as follows:
- Net income increased compared to the third quarter of 2020 to
$120 million.
- Adjusted EBITDA increased compared to the third quarter of 2020
to $110 million.
- Comparable system-wide RevPAR increased to $93.70 in the third
quarter of 2021, and decreased 31.8% compared to the third quarter
2019 on a reported basis.1
- Comparable owned and leased hotels RevPAR increased to $117.33
in the third quarter of 2021, and decreased 35.5% compared to the
third quarter 2019 on a reported basis.1
- Net rooms growth of 6.9% compared to the third quarter of
2020.
- Pipeline of executed management or franchise contracts for
approximately 103,000 rooms, an increase of 2.0% compared to the
third quarter of 2020.
Mr. Hoplamazian continued, "We made significant progress in the
quarter towards executing our long-term strategy through the
acquisition of Apple Leisure Group. The transaction closed on
November 1st and I’m thrilled to welcome the colleagues from this
truly unique leisure platform into the Hyatt family. This
acquisition significantly expands our leisure offerings and
positions Hyatt as a leader in the fast-growing luxury
all-inclusive resort segment. We also advanced our capital strategy
through the completion of our $1.5 billion asset disposition
commitment during the quarter and we announced a new $2 billion
commitment for additional asset sales by the end of 2024. Through
the acquisition of Apple Leisure Group's asset light platform and
expansion of our disposition commitment, we expect to transform our
earnings to approximately 80% fee-based by year end 2024.”
OPERATIONAL UPDATE
Comparable system-wide RevPAR improved 29% in the third quarter
of 2021, as compared to the prior quarter, driven by a strong
recovery in leisure demand and growing momentum in business and
group travel. Leisure transient revenue exceeded 2019 levels in
July, and after a seasonal and sequential decline in August,
returned to nearly fully recovered levels in September. Business
transient and group revenue also gained momentum in the third
quarter, improving more than 40% from the prior quarter. Demand in
the United States and a strong recovery in Europe were primary
drivers of the improved performance.
Comparable owned and leased hotels RevPAR strengthened by 39% in
the third quarter of 2021, as compared to the prior quarter,
benefiting from strong leisure demand in the United States and the
easing of travel restrictions in Europe. Comparable owned and
leased operating margins were 20% for the quarter reflecting strong
operational execution and an improved demand environment.
As of September 30, 2021, 99% of total system-wide hotels (99%
of rooms) were open.
THIRD QUARTER RESULTS
Third quarter of 2021 financial results as compared to the third
quarter of 2020 are as follows:
Management, Franchise and Other Fees
Total management and franchise fee revenues totaled $96 million
in the third quarter of 2021 compared to $40 million reported in
the third quarter of 2020, and reflected a sequential improvement
from $77 million reported in the second quarter of 2021. Base
management fees increased 158.8% to $50 million, incentive
management fees increased 54.7% to $10 million, and franchise fees
increased 141.6% to $36 million during the quarter. Other fee
revenues increased 40.4% to $17 million.
Americas Management and Franchising Segment
Americas management and franchising segment Adjusted EBITDA
increased to $74 million in the third quarter of 2021 compared to
$16 million reported in the third quarter of 2020. Results were led
by increases in franchise fees driven by select service properties
and base fees driven by resort properties. At September 30, 2021,
99% of Hyatt's Americas full and select service hotels (99% of
rooms) were open.
Americas net rooms increased 5.2% compared to the third quarter
of 2020.
Southeast Asia, Greater China, Australia, New Zealand, South
Korea, Japan and Micronesia (ASPAC) Management and Franchising
Segment
ASPAC management and franchising segment Adjusted EBITDA
decreased to $6 million in the third quarter of 2021 compared to $9
million reported in the third quarter of 2020. Results across the
region reflect the impact of travel restrictions which continue to
impact hotel demand. At September 30, 2021, 98% of Hyatt's ASPAC
full and select service hotels (99% of rooms) were open.
ASPAC net rooms increased 12.5% compared to the third quarter of
2020.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia)
Management and Franchising Segment
EAME/SW Asia management and franchising segment Adjusted EBITDA
increased to $5 million in the third quarter of 2021 compared to
$(2) million reported in the third quarter of 2020. Results across
the region were led by Europe as travel restrictions eased leading
to increased transient demand. At September 30, 2021, 99% of
Hyatt's EAME/SW Asia full and select service hotels (98% of rooms)
were open.
EAME/SW Asia net rooms increased 7.3% compared to the third
quarter of 2020.
Owned and Leased Hotels Segment
Total owned and leased hotels segment Adjusted EBITDA increased
to $51 million in the third quarter of 2021 compared to $(56)
million reported in the third quarter of 2020. Owned and leased
hotels segment results improved meaningfully over the quarter
highlighting the strong operating leverage within the portfolio.
Refer to the table on page 9 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 September 30, 2021, 97% of Hyatt's owned and leased hotels
(91% of rooms) were open.
Corporate and Other
Corporate and other Adjusted EBITDA decreased to $(26) million
in the third quarter of 2021 compared to $(15) million reported in
the third quarter of 2020. This decrease was primarily driven by an
increase in certain selling, general, and administrative expenses,
including payroll and related costs.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses remained flat,
inclusive of rabbi trust impact and stock-based compensation.
Adjusted selling, general, and administrative expenses increased to
$64 million in the third quarter of 2021, as a result of prior year
cost containment initiatives, primarily payroll and related costs.
Refer to the table on page 13 of the schedules for a reconciliation
of selling, general, and administrative expenses to Adjusted
selling, general, and administrative expenses.
Income Taxes
The provision for income taxes for the three months ended
September 30, 2021 was $138 million, compared to the benefit for
income taxes of $59 million for the three months ended September
30, 2020. The change in our benefit (provision) for income taxes
was primarily attributable to 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 tax deferred tax
assets, and the impact of unbenefited foreign losses.
OPENINGS AND FUTURE EXPANSION
Twenty new hotels (or 4,599 rooms) opened in the third quarter
of 2021, contributing to a 6.9% increase in net rooms compared to
the third quarter of 2020.
As of September 30, 2021, the Company had executed management or
franchise contracts for approximately 505 hotels (or approximately
103,000 rooms). This compares to approximately 495 hotels (or
approximately 101,000 rooms) as of June 30, 2021.
TRANSACTION / CAPITAL STRATEGY
UPDATE
During the third quarter, the Company completed the following
transactions:
- Hyatt Regency Lake Tahoe Resort, Spa and Casino— a Hyatt
affiliate sold the 422-room Hyatt Regency Lake Tahoe Resort, Spa
and Casino, located in Incline Village, Nevada for approximately
$350 million (approximately $343 million, net of closing costs and
proration adjustments), and entered into a long-term management
agreement.
- Alila Ventana Big Sur— a Hyatt affiliate sold the 59-room Alila
Ventana Big Sur, located in Big Sur, California for approximately
$150 million (approximately $148 million, net of closing costs and
proration adjustments), and entered into a long-term management
agreement.
The above two transactions in the quarter led to the successful
completion of the asset sale commitment announced at the Company's
2019 Investor Day to realize $1.5 billion of asset sales proceeds
by March of 2022. The Company completed the commitment ahead of
schedule and above the committed amount. As of September 30, 2021,
the Company realized net proceeds of approximately $1.6 billion.
Concurrent with the announcement to acquire Apple Leisure Group
("ALG"), the Company committed to realizing an additional $2
billion of proceeds from asset sales by the end of 2024.
COMMON STOCK ISSUANCE / SHARE REPURCHASE /
DIVIDEND
During the third quarter, the Company completed an underwritten
public offering of Class A common stock at a price of $74.50 per
share. The Company issued and sold 8,050,000 shares resulting in
approximately $575 million of net proceeds, which was used to fund
a portion of the purchase price for the ALG acquisition.
There were no Class A or Class B shares repurchased during the
third quarter of 2021. The Company ended the third quarter with
50,287,596 Class A and 59,653,271 Class B shares issued and
outstanding.
Effective March 3, 2020, the Company suspended all share
repurchase activity, and suspended its quarterly dividend.
2021 OUTLOOK
The Company is providing the following guidance for the 2021
fiscal year:
- Adjusted selling, general, and administrative expenses are
expected to be approximately $245 million to $250 million,
inclusive of approximately $5 million to $10 million of expenses
related to non-recurring integration costs for ALG. Refer to the
table on page 13 of the schedules for a reconciliation of selling,
general, and administrative expenses to Adjusted selling, general,
and administrative expenses.
- Capital expenditures are expected to be approximately $110
million.
- The Company expects net rooms growth to be greater than
6.0%.
The Company's 2021 Outlook does not include disposition or
acquisition activity beyond what has been completed as of the date
of this release; however, other than integration costs noted above,
expectations related to ALG are not included in the 2021 Outlook.
The Company's 2021 Outlook is based on a number of assumptions that
are subject to change and many of which are outside the control of
the Company. If actual results vary from these assumptions, the
Company's expectations may change. There can be no assurance that
Hyatt will achieve these results.
BALANCE SHEET / LIQUIDITY
As of September 30, 2021, the Company reported the
following:
- Total debt of $2,988 million.
- Pro rata share of unconsolidated hospitality venture debt of
approximately $633 million, substantially all of which is
non-recourse to Hyatt and a portion of which Hyatt guarantees
pursuant to separate agreements.
- Total liquidity of approximately $4.3 billion with cash and
cash equivalents, including investments in highly-rated money
market funds and similar investments, of $2,418 million, short-term
investments of $357 million, and undrawn borrowing availability of
$1,500 million under the revolving credit facility.
On August 14, 2021, the Company agreed to acquire 100% of the
outstanding limited partnership interests in Casablanca Global
Intermediate Holdings L.P., doing business as Apple Leisure Group,
and 100% of the outstanding ordinary shares of Casablanca Global GP
Limited, its general partner, a leading luxury resort-management
services, travel, and hospitality group, pursuant to a definitive
Securities Purchase Agreement ("Purchase Agreement") for $2.7
billion of total consideration, subject to customary adjustments
set forth in the Purchase Agreement relating to working capital,
cash, and indebtedness. The Purchase Agreement also provides for
contingent consideration following the closing of the transaction
upon the achievement, if ever, of certain targets related to ALG's
outstanding travel credits. The transaction closed on November 1,
2021 and the Company paid cash of $2.7 billion. The transaction was
funded with a combination of cash on hand, $1 billion of proceeds
from senior note issuances described below, $575 million of
proceeds from the common stock issuance, and $210 million of
borrowings on the Company's revolving credit facility.
On October 1, 2021, the Company issued $700 million of 1.300%
senior notes due 2023 at an issue price of 99.941%, $300 million of
floating rate senior notes due 2023 at par, and $750 million of
1.800% senior notes due 2024 at an issue price of 99.994%. The
Company received approximately $1.7 billion of net proceeds, after
deducting underwriting discounts and other offering expenses.
On October 15, 2021, utilizing proceeds from the senior notes
issuance, the Company redeemed the Company's $750 million of
three-month LIBOR plus 3.000% senior notes due 2022 for
approximately $753 million, inclusive of $750 million of aggregate
principal and $3 million of accrued interest outstanding.
CONFERENCE CALL INFORMATION
The Company will hold an investor conference call tomorrow,
November 4, 2021 at 10:00 a.m. CT. Participants may listen to a
simultaneous webcast of the conference call, which may be accessed
through the Company’s website at investors.hyatt.com.
Alternatively, participants may access the live call by dialing
833-238-7946 (U.S. Toll-Free) or 647-689-4468 (International Toll
Number) using conference ID# 3360747 approximately 15 minutes prior
to the scheduled start time. A replay of the call will be available
Thursday, November 4, 2021 at 12:00 p.m. CT until Thursday,
November 11, 2021 at 11:00 p.m. CT by dialing 800-585-8367 (U.S.
Toll-Free) or 416-621-4642 (International Toll Number), using
conference ID# 3360747. An archive of the webcast will be available
on the Company’s website for 90 days.
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, 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, the Company's liquidity and earnings profile, the
number of properties we expect to open in the future, our expected
Adjusted SG&A expenses, our expected capital expenditures, our
expected net rooms growth, 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: risks associated with the
consummation of the acquisition of Apple Leisure Group; including
the related incurrence of material additional indebtedness; the
Company’s ability to successfully integrate Apple Leisure Group’s
employees and operations into the Company; the ability to realize
the anticipated benefits and synergies of the acquisition of Apple
Leisure Group 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; 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 Apple Leisure Group’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; and other risks discussed in
the Company's filings with the SEC, including our annual report on
Form 10-K, 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 guided by its purpose – to care for
people so they can be their best. As of September 30, 2021, Hyatt’s
portfolio included more than 1,000 hotel and all-inclusive
properties in 69 countries across six continents, and the
acquisition of Apple Leisure Group added 96 properties in 10
countries as of November 1, 2021. Hyatt’s offerings include the
Park Hyatt®, Miraval®, Grand Hyatt®, Alila®, Andaz®, The Unbound
Collection by Hyatt®, Destination by Hyatt™, Hyatt Regency®,
Hyatt®, Hyatt Ziva™, Hyatt Zilara™, Thompson Hotels®, Hyatt
Centric®, Caption by Hyatt, JdV by Hyatt™, Hyatt House®, Hyatt
Place®, UrCove, and Hyatt Residence Club® brands, as well as resort
and hotel brands under the AMR™ Collection, including Secrets®
Resorts & Spas, Dreams® Resorts & Spas, Breathless® Resorts
& Spas, Zoëtry® Wellness & Spa Resorts, Alua® Hotels &
Resorts, and Sunscape® Resorts & Spas. Hyatt’s subsidiaries
operate the World of Hyatt® loyalty program, ALG Vacations®,
Unlimited Vacation Club®, Amstar DMC destination management
services, and the Trisept Solutions® travel technology platform.
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 16 and non-GAAP reconciliations
included in the schedules.
Note: All RevPAR and ADR percentage
changes are in constant dollars. This release includes references
to non-GAAP financial measures. Refer to the non-GAAP
reconciliations included in the schedules and the definitions of
the non-GAAP measures presented beginning on page 10.
1 RevPAR percentage changes calculated
from comparable system-wide and comparable owned and leased hotels
RevPAR of $137.33 and $181.97, respectively, as reported for the
third quarter of 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103006106/en/
Investor Contact: Noah Hoppe, 312.780.5991
noah.hoppe@hyatt.com
Media Contact: Franziska Weber, 312.780.6106
franziska.weber@hyatt.com
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