Higher room occupancy, rates underpin standout Q4 for Hyatt

This winter may be cold, but Hyatt Hotels Corp.'s fourth quarter was hot. The Chicago-based hotel operator posted big numbers in the quarter, as higher room rates and occupancy helped double the company's profits.

"Looking ahead, we expect healthy occupancy levels in the U.S. to support increasing strength in room prices," CEO Mark Hoplamazian said.

Overall, Hyatt posted earnings of $32 million, up from $16 million in the prior-year period. Revenue improved 9.1 percent to $1.09 billion.

Revenue per available room rose 6.2 percent at comparable owned and leased hotels in the fourth quarter. Occupancy increased to 72.5 percent from 70.7 percent, and average daily rates rose 4.7 percent.

Hyatt during the quarter opened 16 hotels pushing its total openings for the year to 51. "We continue to be focused on expanding our presence in key markets around the world," Hoplamazian said.

One way it did this was through a July deal to enter the all-inclusive segment, in partnership with Playa Hotels & Resorts. Hyatt invested a reported total of $325 million, consisting of $100 million for an approximate 20-percent ownership stake in Playa and $225 million for convertible preferred stock in Playa.

"The fourth quarter openings included our first all inclusive resorts, Hyatt Ziva Los Cabos and Hyatt Zilara Cancun and the second resort for the Andaz brand, Andaz Peninsula Papagayo that opened to very positive guest feedback and joins the recently opened Andaz Maui at Wailea. We also continued to expand the Hyatt Place brand by opening hotels in urban markets such as Charlotte, Minneapolis, Nashville and Omaha. Our current base of executed contracts for new hotels is the largest it has ever been and represents approximately 40 percent of our current system size, reflecting healthy demand for our brands across all regions," Hoplamazian said.

Hyatt, like other hotel companies, is continuing a asset-sale approach, including a recent 10-hotel portfolio sale to RLJ Lodging for around $313 million. "Our asset recycling strategy continues to provide additional opportunities to fund growth in targeted areas," Hoplamazian continued. "In 2013, we sold seven full-service and three select-service hotels at strong pricing while maintaining brand presence. Additionally, we realized more than $400 million in cash from the settlement of loans, and the sale of venture and preferred equity investments. Looking ahead, we expect healthy occupancy levels in the U.S. to support increasing strength in room prices. We expect to continue our asset recycling program and deploy proceeds into key growth priorities in order to drive guest and owner preference for our brands."

Hyatt's Q4 report comes on the heels of Starwood Hotel and Resorts Worldwide reporting its Q4 numbers. Starwood had a weaker fourth quarter over the same time last year as net income dropped to $128 million—$14 million lower than a year earlier.

Fourth-quarter revenue declined to $1.51 billion from $1.53 billion a year earlier, Starwood said. Revenue per available room rose 5.3 percent percent worldwide and 6.1 percent in North America when adjusted for currency fluctuations.


 

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