Hyatt (H) Q4 Earnings & Revenues Beat, System-Wide RevPAR Up Y/Y
Hyatt Hotels Corporation H delivered fourth-quarter 2023 results, wherein earnings topped the Zacks Consensus Estimate but declined on a year-over-year basis.
The company's revenues surpassed the consensus mark and increased year over year.
Hyatt’s quarterly results reflected year-over-year growth in comparable system-wide revenue per available room (RevPAR), driven by an increase in occupancy and average daily rate (ADR). This uptrend is mainly driven by strong global travel demand, especially among leisure and business guests, and group customers. Moreover, rapid improvement in Greater China and strengthening group demand in the United States are encouraging.
Notably, global travel demand and net room growth fueled record fee generation in the quarter. Also, it achieved an asset-light earnings mix of about 76% for the full year, reflecting the efficient execution of its strategic initiatives.
However, increased costs and expenses and foreign currency risks partially offset the aforementioned tailwinds and hurt the bottom line.
Following the results, shares of this global hospitality company inched down 0.8% in the pre-market trading session on Feb 23.
Q3 Earnings & Revenues
During the quarter under discussion, Hyatt reported adjusted earnings per share (EPS) of 64 cents, beating the Zacks Consensus Estimate of 38 cents by 68.4%. In the year-ago quarter, the company reported an EPS of $2.55.
Hyatt Hotels Corporation Price, Consensus and EPS Surprise
Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote
Quarterly revenues of $1.66 billion also topped the consensus mark of $1.57 billion by 5.7% and climbed 4.5% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA was $241 million, up 4% year over year. Our model predicted the metric to be $223.6 million. Adjusted EBITDA margin increased to 27.2% by 20 basis points (bps) from 27% reported in the year-ago quarter.
Segmental Details
Hyatt manages business through five reportable segments, which are Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising; and Apple Leisure Group.
During the quarter under review, adjusted revenues in the Owned and Leased Hotels segment totaled $359 million, up 8.8% year over year. The segment benefited from growth in group travel, and increased rate growth across group and transient customers. Our model estimated the revenues to be $306.8 million year over year.
Segmental RevPAR grew 5.9% from the year-ago quarter’s level. ADR was up 5.1% and occupancy rate expanded 0.5 percentage points from 2022 levels.
The segment’s adjusted EBITDA of $71 million up 1.2% year over year.
Americas Management and Franchise segment’s total adjusted fee revenues amounted to $131 million, down 13% year over year. Our model estimated the metric to decline 1% year over year to $151.5 million.
RevPAR for comparable Americas hotels rose 3.4% from the year-ago quarter’s level. ADR improved 2.6% and the occupancy rate moved up 0.6 percentage points from the year-ago quarter’s numbers.
Segmental adjusted EBITDA increased 7.6% year over year to $114 million.
In ASPAC Management and Franchising, RevPAR for comparable ASPAC hotels grew 37.6% from the year-earlier quarter’s figure. ADR grew 8.6% and the occupancy rate improved 15.1 percentage points from the year-ago quarter’s levels. The uptrend was backed by strength in each of the customer segments, mainly improvements in Greater China.
Adjusted EBITDA was $36 million compared with $20 million in the year-ago quarter.
In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia hotels’ RevPAR increased 3% from the year-ago quarter’s levels. ADR increased 0.9% and occupancy rate rose 1.4 percentage points from the year-ago quarter’s numbers. This was driven by resilient leisure demand and strong business transient and group performance along with increased airlift from the United States, Middle East, and China.
Adjusted EBITDA totaled $17 million compared with $15 million in the year-ago quarter.
In the Apple Leisure Group segment, adjusted revenues declined 2.9% year over year to $305 million. Our model hinted at an increase of 4.9% year over year.
Adjusted EBITDA was $21 million, down 52.8% from $43 million reported in the year-ago quarter.
Balance Sheet
As of Dec 31, 2023, Hyatt reported cash and cash equivalents of $896 million compared with $727 million reported in the previous quarter. Total liquidity was $2.4 billion in the fourth-quarter 2023 end. Total debt as of Dec 31, 2023, was $3.06 million, implying a sequentially flat growth rate.
Sneak Peek at 2023
Total revenues in 2023 were $6.67 billion, up from $5.89 billion in 2022.
Adjusted EBITDA in the year was $1.03 billion, up 13.4% from $908 million in 2022. Adjusted EBITDA margin was 28.1%, up 60 bps year over year.
In 2023, adjusted diluted EPS was $2.56, down from $3.28 reported in the prior year.
Other Business Updates
Coming to hotel openings, 29 new hotels (or 9,648 rooms) joined Hyatt's system in the fourth quarter of 2023, thus making it a total of 101 new hotels (or 23,965 rooms) in the full year. As of Dec 31, 2023, Hyatt has a pipeline of executed management or franchise contracts for approximately 650 hotels (or about 127,000 rooms), including 17 Hyatt Studios hotels (approximately 2,000 rooms).
2024 Outlook
For 2024, the company expects adjusted selling, general and administrative expenses to be between $425 million and $435 million. Capital expenditures are projected to be approximately $170 million. Net room growth in 2024 is anticipated to be between 5.5% and 6% year over year.
Management anticipates 2024 system-wide RevPAR to rise 3-5% from 2023 levels. Adjusted EBITDA is estimated in the $1.18-$1.23 billion band. Management, franchise, license, and other fees are expected between $1.1 billion and $1.13 billion.
Zacks Rank & Recent Consumer Discretionary Releases
Hyatt currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marriott Vacations Worldwide Corporation VAC reported fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate after missing in the preceding quarter. The top line increased on a year-over-year basis, but the bottom line declined.
Following a challenging year, the company concluded the year positively, with contract sales increasing 4% in the reported quarter from the previous year’s levels. Volumes Per Guest remained consistent with the prior year, adjusting for the estimated impact of the Maui wildfires. Meanwhile, the company has progressed with the transition to Abound by Marriott Vacations. Looking ahead, the focus is on utilizing technology to boost revenues and enhance efficiency and cost savings across the organization.
Choice Hotels International, Inc. CHH delivered mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top line fell year over year, while the bottom line increased from the prior-year quarter’s figure.
In 2023, the company reported an uptick in growth, exceeding its full-year adjusted EBITDA and adjusted EPS guidance. The upside was propelled by the effective strategy of incorporating hotels with higher royalties per unit. The company expanded its rewards program, extended its geographic reach, utilized platform capabilities and achieved substantial growth through the rapid completion of the Radisson Americas' integration. Given the strategic initiatives and the hotel conversion opportunities, the company is optimistic and anticipates the growth momentum to continue in 2024 and beyond.
PENN Entertainment, Inc. PENN reported a wider-than-expected loss in its fourth-quarter 2023 results. Both the bottom and top lines saw a year-over-year decrease.
The decline was primarily attributed to the sale of Barstool and losses incurred during the relaunch of an online betting venture ESPN BET, both of which significantly impacted the quarterly financial performance. Also, softness in the South and Northeast regions added to the decline. Nonetheless, sign-ups for the service surpassed management's expectations, with more than 1 million new customers joining within the initial two months. Penn Entertainment anticipates that ESPN BET will capture 46% of the online sports betting market once North Carolina and New York are included.
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