A month has gone by since the last earnings report for Hyatt Hotels (H). Shares have added about 10.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Hyatt Hotels due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Hyatt Q4 Earnings & Revenues Miss Estimates, Fall Y/Y
Hyatt reported dismal fourth-quarter 2020 results, wherein earnings and revenues not only missed the Zacks Consensus Estimate but also declined sharply on a year-over-year basis. Notably, both the top and bottom lines missed the Zacks Consensus Estimate for the third straight quarter.
Nonetheless, RevPAR improved sequentially for the fourth quarter of 2020, with comparable system-wide RevPAR, and owned and leased hotels RevPAR improving modestly.
The company reported adjusted loss per share of $1.77, wider than the Zacks Consensus Estimate of a loss of $1.36. In the prior-year quarter, it reported adjusted earnings per share of 47 cents per share.
Quarterly revenues of $424 million missed the consensus mark of $454 million by 6.5%. The top line declined 66.7% from the year-ago quarter.
Adjusted EBITDA plunged to $(98) million from $191 million a year ago. Notably, almost half of the loss was due to costs incurred on behalf of its managed and franchised properties that the company do not intend to recover from hotel owners.
Moreover, adjusted EBITDA margin declined to (59.8%) for the fourth quarter against 29.7% growth in the year-ago period.
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 $91 million, down 80% from the year-ago number. The sharp decline can primarily be attributed to the impact of coronavirus on comparable owned and leased hotels, and dispositions. Owned and leased hotels RevPAR declined 81.8% year over year for the quarter. Average daily rate (ADR) was down 29.4% and occupancy rate fell 53.6 percentage points for the fourth quarter.
Meanwhile, adjusted EBITDA decreased 148.5% from the prior-year quarter to $(48) million. At constant currency, the same declined 148.6% from the year-ago quarter.
Meanwhile, total management and franchise fee revenues decreased 67.4% (down 67.6% in constant currency) from the prior-year period to $47 million. That said, the metric improved sequentially from $40 million reported in third-quarter 2020.
For Americas Management and Franchising, RevPAR for comparable Americas full-service hotels decreased 79.4% from the year-ago period. While ADR declined 25%, occupancy rates fell 51.1 percentage points from the year-ago number.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 57.3% from a year ago. ADR declined 28.6% and occupancy rates decreased 28.6 percentage points from the year-ago number.
Adjusted EBITDA fell 90.3% (down 90.2% in constant currency) from the prior-year figure to $9 million.
For ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels declined 52.3% from the year-ago figure. ADR declined 22.8% and occupancy rates fell 28.4 percentage points from the year-ago quarter.
Meanwhile, RevPAR for comparable ASPAC select-service hotels was down 31.1% on a year-over-year basis. Occupancy and ADR declined 11.1 percentage points and 18.4% year over year, respectively, for the quarter under review.
Adjusted EBITDA was down 65.5% (down 66.8% at constant currency) from the prior-year level to $9 million.
For EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR decreased 75.6% from the year-ago level on account of the COVID-19 crisis. ADR slumped 31% and occupancy rates declined 46.3 percentage points for the quarter.
Adjusted EBITDA plunged 121.8% (down 122.4% at constant currency) from the year-earlier quarter to $(3) million.
Total revenues were $2.07 billion, down from $5.02 billion in 2019. Comparable system-wide RevPAR was down 65.4% from a year ago. Adjusted EBITDA decreased to $(177) million from $754 million in 2019.
As of Dec 31, 2020, the company's pipeline consisted of approximately 500 hotels, or 101,000 rooms.
As of Dec 31, 2020, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $1,207 million. Total debt was $3.244 million as of Dec 31, 2020.
The company ended the fourth quarter with 38,466,898 Class A and 62,696,948 Class B shares issued, as well as outstanding. Notably, it has an undrawn borrowing availability of $1.499 billion under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 23 new hotels (or 6,877 rooms) joined Hyatt's system in the fourth quarter of 2020. This contributed to a 5.2% increase in net rooms from the fourth quarter of 2019. In 2020, the company opened a total of 72 new hotels (or 14,972 rooms) including 11 operating properties (or 2,837 rooms) that converted to a Hyatt brand.
Approximately 94% of total system-wide hotels were open as of Dec 31, 2020 compared with 92% on Sep 30, 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -21.31% due to these changes.
At this time, Hyatt Hotels has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hyatt Hotels has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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