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Hyatt (H) Q2 Earnings & Revenues Miss Estimates, Fall Y/Y

Zacks Equity Research

Hyatt Hotels Corporation H reported dismal second-quarter 2020 results, wherein earnings and revenues not only missed the Zacks Consensus Estimate but also declined sharply on a year-over-year basis.

The company reported adjusted loss per share of $1.80, wider than the Zacks Consensus Estimate of a loss of $1.38. In the prior-year quarter, the company had reported adjusted earnings per share of 76 cents.

Quarterly revenues of $250 million missed the consensus mark of $251 million by 0.2%. The top line also declined 80.6% from the year-ago quarter.

Operating Highlights

Adjusted EBITDA slumped 154.6% to $117 million (down 155.2% at constant currency). Moreover, adjusted EBITDA declined 274.6% in the second quarter against 31.6% growth in the year-ago quarter.

Hyatt Hotels Corporation Price, Consensus and EPS Surprise

 

Hyatt Hotels Corporation Price, Consensus and EPS Surprise
Hyatt Hotels Corporation Price, Consensus and EPS Surprise

Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote

Segmental Details

Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.

Revenues at Owned and Leased Hotels totaled $20 million, down 95.9% from the year-ago quarter number. The sharp decline can primarily be attributed to the impact of coronavirus on comparable owned and leased hotels as well as dispositions. Owned and leased hotels RevPAR declined 97.4% in the quarter. While ADR was down 32.6%, occupancy rate declined 75 percentage points during the second quarter.

Meanwhile, adjusted EBITDA decreased 168.2% to ($78) million. At constant currency, the same declined 168.6%.

Revenues at Americas Management and Franchising amounted to $10 million, reflecting a decline of 92.5% and 92.4% from the year-ago figure and constant currency, respectively.

RevPAR for comparable Americas full-service hotels decreased 95.7%. While ADR declined 35.4%, occupancy rates fell 74 percentage points from the year-ago quarter number.

Meanwhile, RevPAR for comparable Americas select-service hotels was down 81.2%. While ADR declined 31.1%, occupancy rates decreased 57.7 percentage points from the year-ago quarter number.

Adjusted EBITDA fell 103% (as well as in constant currency) to ($3) million.

Revenues at ASPAC Management and Franchising decreased 81.8% year over year (down 81.5% at constant currency) to $6 million.

RevPAR for comparable ASPAC full-service hotels declined 79.1%. While ADR declined 36.4%, occupancy rates decreased 49 percentage points from the year-ago quarter number.

Meanwhile, RevPAR for comparable Americas select-service hotels was down 58%. Occupancy and ADR declined 32.3 percentage points and 18.4%, respectively, in the quarter under review.

Adjusted EBITDA were down 108.3% (down 108.5% at constant currency) to ($2) million.

Revenues at EAME/SW Asia Management and Franchising were down 90.4% to $2 million.

Comparable EAME/SW Asia full-service hotels’ RevPAR decreased 93.9% on account of suspension of hotel operation owing to the COVID-19 crisis. While ADR decreased 35.4%, occupancy rates declined 60.6 percentage points during the quarter.

Adjusted EBITDA decreased 201.4% (down 208.5% at constant currency) to ($11) million.

Balance Sheet

As of Jun 30, 2020, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $1,438 million. The total debt was $2,500 million as of Jun 30, 2020.

The company ended the second quarter with 38,114,681 Class A and 63,028,031 Class B shares issued as well as outstanding. Notably, the company suspended all share repurchase activity effective Mar 3, 2020, and suspended its quarterly dividend through the first quarter of 2021.

Other Business Updates

With traces of recovery in greater China, preliminary estimate for occupancy is at 57% for July. However, excluding Hong Kong, Macau, and Taiwan, occupancy rates are estimated at 65%.

Coming to hotel openings, approximately 87% of total system-wide hotels were open as of Jul 31, 2020, compared with around 65% of total system-wide hotels as of Apr 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% in the ASPAC region were open. In the owned and leased hotels segment, approximately 69% of the hotels were operating.

With travel restrictions and quarantines in place, the company has been witnessing Dismal Revpar across the globe. Nonetheless, the company stated that it has been witnessing sequential improvement in Revpar since April.

However, for July, preliminary estimates indicate a decline of approximately 76% in RevPAR for all comparable system-wide hotels compared with that of 2019. Notably, the decline can be primarily attributed to the negative impact of the coronavirus pandemic.

Hyatt, which shares space with Choice Hotels CHH, Hilton HLT and Marriott Vacations Worldwide VAC, carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Choice Hotels International, Inc. (CHH) : Free Stock Analysis Report
 
Hyatt Hotels Corporation (H) : Free Stock Analysis Report
 
Marriot Vacations Worldwide Corporation (VAC) : Free Stock Analysis Report
 
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
 
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