Hyatt's (H) Q1 Earnings Miss Estimates, Revenues Surpass
Hyatt Hotels Corporation H delivered first-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues surpassing the same. The top and the bottom line increased on a year-over-year basis.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, stated, "For the fourth consecutive quarter we posted record results that exceeded our expectations, demonstrating our unique positioning and differentiated model. We raised our full year RevPAR outlook while maintaining our record level pipeline and industry leading net rooms growth. During the quarter, the recovery in Asia Pacific was particularly remarkable with broad improvements across the region. We continue to experience favorable booking trends and our outlook remains optimistic."
Q1 Earnings & Revenues
During the first quarter, Hyatt reported adjusted earnings per share (EPS) of 41 cents, missing the Zacks Consensus Estimate of 47 cents. In the prior-year quarter, the company reported an adjusted loss of 33 cents per share.
Hyatt Hotels Corporation Price, Consensus and EPS Surprise
Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote
Quarterly revenues of $1,680 million beat the consensus mark of $1,594 million by 6%. Moreover, the top line surged 31.4% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $268 million compared with $169 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 27.8% in the first quarter compared with 22.6% reported in the year-ago quarter.
Segmental Details
Hyatt manages business through five reportable segments — 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 Segment.
During the first quarter, revenues in the Owned and Leased Hotels segment totaled $314 million compared with $271 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Continued recovery from group and business travel added to the upside. Owned and leased hotels’ RevPAR surged 52.9% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 11.1% and the occupancy rate increased 18.9 percentage points from 2022 levels.
The segment’s adjusted EBITDA came in at $74 million during the fourth quarter compared with $54 million reported in the year-ago quarter.
During the quarter, total Management and Franchise fee revenues came in at $231 million compared with $154 million reported in the year-ago quarter. The metric rose sequentially from $226 million reported in fourth-quarter 2022.
In Americas Management and Franchising, RevPAR for comparable Americas hotels (during the first quarter) surged 31.1% from the prior-year quarter’s level. While ADR increased 10.1%, occupancy rates moved up 110.4 percentage points from the prior-year quarter’s number.
Adjusted EBITDA during the first quarter came in at $119 million compared with $85 million reported in the year-ago quarter.
In ASPAC Management and Franchising, RevPAR for comparable ASPAC hotels (during the first quarter) increased 104.9% from the year-ago quarter’s figure. ADR increased 27.8% and occupancy rates improved 24.3 percentage points from the year-ago quarter’s number. During the quarter, the company reported accelerated recovery in Mainland China, owing to the easing of travel restrictions.
During the quarter, adjusted EBITDA came in at $25 million compared with $7 million reported in the year-ago quarter.
In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia hotels’ RevPAR surged 47.4% from the year-ago quarter’s level. ADR increased 12% and occupancy rates rose 15 percentage points from the year-ago quarter’s number. The upside was primarily driven by strong leisure demand throughout Western Europe.
Adjusted EBITDA during the first quarter came in at $12 million compared with $4 million reported in the year-ago quarter.
In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the first quarter came in at $79 million compared with $56 million reported in the prior-year quarter. Solid demand for leisure travel, elevated airlift activities (for key Americas destinations) and a favorable pricing environment added to the upside.
Balance Sheet
As of Mar 31, 2023, Hyatt reported cash and cash equivalents of $1,051 million compared with $1,149 million reported in the previous quarter. Total debt as of Mar 31, 2023, stood at $3,102 million compared with $3,113 million as of Dec 31, 2022.
The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 28 new hotels (or 5,128 rooms) joined Hyatt's system in the first quarter of 2023. As of Mar 31, 2023, Hyatt executed management or franchise contracts for approximately 580 hotels (or 117,000 rooms).
It continues to progress with respect to its $2.0 billion asset disposition commitment. During the first quarter, the company initiated the marketing for two assets held for sale. The company expects to generate approximately $2 billion in gross proceeds from the sales of real estate (net of acquisitions) by 2024-end. As of Mar 31, 2023, the company has realized proceeds worth $721 million (from the net disposition of owned assets).
2023 Outlook
For 2023, the company expects adjusted selling, general and administrative expenses between $480 million and $490 million. Capital expenditures are projected at approximately $200 million. Unit growth in 2023 is anticipated at approximately 6% on a net-room basis.
The company anticipates 2023 system-wide RevPAR to increase 12-16% from 2022 levels.
Zacks Rank & Key picks
Hyatt currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Boyd Gaming Corporation BYD, Crocs, Inc. CROX and PlayAGS, Inc. AGS.
Boyd Gaming currently sports a Zacks Rank #1 (Strong Buy). BYD has a trailing four-quarter earnings surprise of 13.7%, on average. Shares of BYD have gained 17.5% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BYD’s 2023 sales and EPS indicates a rise of 1.4% and 4%, respectively, from the year-ago period’s levels.
Crocs carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 19.6%, on average. Shares of Crocs have increased 66.4% in the past year.
The Zacks Consensus Estimate for CROX’s 2023 sales and EPS indicates a rise of 13% and 5.6%, respectively, from the year-ago period’s levels.
PlayAGS carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 133.3%, on average. The stock has declined 19.2% in the past year.
The Zacks Consensus Estimate for AGS 2024 sales and EPS indicates a rise of 3% and 1,856.7%, respectively, from the year-ago period’s estimated levels.
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