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Bear of the Day: Hyatt (H)

·3 min read

Hyatt Hotels Corp. (H) has rebounded from the spring coronavirus lockdowns. But this Zacks Rank #5 (Strong Sell) is still facing the challenges of the coronavirus’ impact on travel in 2021.

Hyatt operates more than 950 hotel, all-inclusive and wellness resort properties in 67 countries across six continents. It operates under 21 brans including Park Hyatt, Miraval, Andaz, Hyatt Ziva, Thompson Hotels, Joie de Vivre and Hyatt Zilara, among others.

It also operates the World of Hyatt loyalty program.

2021 Earnings Estimates Are Being Cut

Over the last month, four 2021 earnings estimates have been cut, pushing down the full year Zacks Consensus estimate to a loss of $2.90 from a loss of $2.82.

One estimate was cut in the last week.

However, analysts still expect to see earnings improvement compared to 2020 of 42% as Hyatt is expected to lose $4.99 in 2020.

It reports fourth quarter 2020 earnings on Feb 17, 2021.

Improvements Off the 2020’s Lows

In the third quarter of 2020, comparable RevPar fell 72% but China was among its strongest market as it recovered quickly from the coronavirus shutdown.

Hyatt was bullish about the future in the third quarter. It opened 27 new hotels with 4300 new rooms, a new third quarter record, even as the pandemic continued to impact travel globally.  

As of Oct 31, 2020, 94% of total system-wide hotels (and 92% of rooms) were open.

Cash Situation

As of Sep 30, 2020, Hyatt had $1.778 million in cash on hand.

However, further travel shutdowns have occurred to start the new year.

Are these a temporary setback to the travel industry?

Shares Up on Vaccine Hopes

Shares have jumped 27% over the last 3 months on vaccine hopes for a return to travel.

But, they’re still down 16.4% over the last year.

Investors interested in the hotel stocks might want to wait on the sidelines until there is a clearer picture of the extent of the recovery in the travel industry.

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