Hyatt Reports Second Quarter 2016 Results

Published on : Wednesday, August 3, 2016

_logo_hyattHyatt Hotels Corporation (“Hyatt” or the “Company”) (NYSE: H) today reported second quarter 2016 financial results. Net income attributable to Hyatt was $67 million, or $0.49 per diluted share, in the second quarter of 2016, compared to $40 million, or $0.27 per diluted share, in the second quarter of 2015. Adjusted net income attributable to Hyatt was $87 million, or $0.64 per diluted share, in the second quarter of 2016 compared to $41 million, or $0.28 per diluted share, in the second quarter of 2015. Refer to the table on page 3 of the schedules for a summary of special items impacting Adjusted net income and Adjusted earnings per share in the three months ended June 30, 2016.

 

Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “We reported solid second quarter results while continuing to execute our long-term growth strategy. Adjusted EBITDA grew 9.7% in the quarter, excluding the impact of foreign currency translation and transactions. Our outlook for the overall business remains positive despite some near-term challenges. In line with current trends, we are revising expectations for comparable systemwide RevPAR growth to a range of approximately 2% to 3% for the year.”

 

Second quarter 2016 financial highlights as compared to the second quarter of 2015 are as follows:

• Net income increased 67.5% to $67 million.

• Adjusted EBITDA increased 5.6% to $227 million, up 7.1% in constant currency.

• Comparable systemwide RevPAR increased 2.3%, including an increase of 4.5% at comparable owned and leased hotels.

• Comparable U.S. hotel RevPAR increased 4.2%; full service and select service hotel RevPAR increased 3.2% and 6.9%, respectively.

• Net hotel and net rooms growth was 8% and 6%, respectively.

• Comparable owned and leased hotels segment operating margins were stable at 27.6%.

 

Mr. Hoplamazian continued, “We continue to deliver against our goal to become the most preferred hospitality brand. In the second quarter, we gained market share systemwide, with particular strength in the Americas. Developer demand for our brands remains strong. Our executed contract base increased to approximately 61,000 rooms, and we remain on track to open more than 60 hotels this year. We also continued to make good progress with respect to our capital recycling efforts. In late June, we sold Andaz 5th Avenue and announced the acquisition of Royal Palms Resort and Spa, which will become part of The Unbound Collection by Hyatt. With the underlying momentum in our business, we expect a solid finish to the year.”

 

Second quarter 2016 segment results as compared to the second quarter of 2015 are as follows. Hyatt evaluates segment operating performance using segment revenue and segment Adjusted EBITDA.

 

Owned and Leased Hotels Segment

Total owned and leased hotels segment Adjusted EBITDA increased 6.4% (8.0% in constant currency) including a 47.4% increase in pro rata share of unconsolidated hospitality ventures Adjusted EBITDA. Refer to the table on page 16 of the schedules for a detailed list of portfolio changes and the year-over-year net impact to second quarter owned and leased hotels segment Adjusted EBITDA. Owned and leased hotels revenue increased 3.5% (4.7% in constant currency) and expenses increased 5.6%.

 

RevPAR for comparable owned and leased hotels increased 4.5%, driven by strength at comparable owned hotels in the Americas, partially offset by softer performance at comparable owned hotels in the EAME/SW Asia region. Occupancy increased 130 basis points and ADR increased 2.9%.

 

Comparable owned and leased hotels revenue increased 2.6%. Excluding expenses related to benefit programs funded through rabbi trusts and non-comparable hotel expenses, expenses increased 2.6%, reflecting increases in health insurance, labor costs and property taxes at certain properties. Comparable owned and leased hotels segment operating margins were stable at 27.6%. Refer to the table on page 10 of the schedules for a reconciliation of comparable owned and leased hotels expenses to owned and leased hotels expenses.

 

The following hotel was added to the portfolio in the second quarter:

• The Confidante, part of The Unbound Collection by Hyatt (owned, 363 rooms)

The following hotel was removed from the owned and leased hotels portfolio as it was sold in the second quarter:

• Andaz 5th Avenue (184 rooms). The Company entered into a long-term management agreement with the buyer and therefore the hotel remains in the Hyatt system.

 

Management and Franchise Fees

Total fee revenue increased 2.7% (consistent with change in constant currency) to $115 million. Base management fees and incentive management fees were flat at $49 million and $30 million, respectively. Franchise fees increased 22.7% to $27 million, primarily due to new and converted hotels and improved performance at existing hotels in the Americas. Other fee revenues decreased 18.2% to $9 million.

Americas Management and Franchising Segment

Americas management and franchising segment Adjusted EBITDA increased 8.5% (9.9% in constant currency). RevPAR for comparable Americas full service hotels increased 3.4%; occupancy was flat and ADR increased 3.4%. RevPAR for comparable Americas select service hotels increased 6.9%; occupancy increased 230 basis points and ADR increased 3.9%. Revenue from management, franchise and other fees increased 4.2% (5.3% in constant currency).

 

Transient rooms revenue at comparable U.S. full service hotels increased 3.9%; room nights increased 1.7% and ADR increased 2.1%. Group rooms revenue at comparable U.S. full service hotels increased 3.5%; room nights increased 0.7% and ADR increased 2.8%.

 

The following seven hotels were added to the portfolio in the second quarter:

• Hyatt Centric Montevideo, Uruguay (managed, 178 rooms)

• The Confidante, part of The Unbound Collection by Hyatt (owned, 363 rooms)

• Hyatt Place Chicago O’Hare Airport (franchised, 200 rooms)

• Hyatt Place Cleveland / Lyndhurst / Legacy Village (franchised, 135 rooms)

• Hyatt Place Kansas City / Lenexa City Center (franchised, 127 rooms)

• Hyatt Place Washington DC / Georgetown / West End (franchised, 168 rooms)

• Hyatt House Chicago / Evanston (franchised, 114 rooms)

 

Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising Segment

ASPAC management and franchising segment Adjusted EBITDA decreased 7.7% (consistent with change in constant currency). RevPAR for comparable ASPAC full service hotels increased 1.4%, driven by strength in Northeast Asia and offset by softer results in Greater China. Occupancy increased 250 basis points and ADR decreased 2.3%. Revenue from management, franchise and other fees decreased 4.3%, as the benefit of comparable RevPAR gains and unit growth in the second quarter of this year was offset by non-recurring revenue in the second quarter of last year.

 

The following five hotels were added to the portfolio in the second quarter:

• Hyatt Regency Shanghai, Wujiaochang, China (managed, 306 rooms)

• Hyatt Place Luoyang, China (managed, 248 rooms)

• Hyatt Place Phuket, Patong, Thailand (managed, 161 rooms)

• Hyatt Place Shenzhen Airport, China (managed, 167 rooms)

• Hyatt House Shenzhen Airport, China (managed, 112 rooms)

 

Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management Segment

EAME/SW Asia management segment Adjusted EBITDA decreased 11.1% (consistent with change in constant currency). RevPAR for comparable EAME/SW Asia full service hotels decreased 9.9%, driven by weakness in parts of Western Europe, the Middle East and Turkey, and offset by relative strength in Eastern Europe and Southwest Asia. Occupancy decreased 450 basis points and ADR decreased 3.4%. Revenue from management and other fees decreased 5.9%.

The following three hotels were added to the portfolio in the second quarter:

• Park Hyatt Mallorca, Spain (managed, 142 rooms)

• Hyatt Regency Chandigarh, India (managed, 211 rooms)

• Hyatt Place London Heathrow / Hayes, England (managed, 170 rooms)

 

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased 2.7%. Adjusted selling, general, and administrative expenses were flat. Increased payroll and related costs were offset by reductions in professional fees. Refer to the table on page 9 of the schedules for a reconciliation of Adjusted selling, general, and administrative expenses to selling, general, and administrative expenses.

 

 

 

Source:- Hyatt  Hotels

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