Hyatt Hotels Corp. showed improvement across the key industry fundamentals, but pesky expenses led the Chicago-based hotel operator to a 34-percent decline in profit. Meanwhile, other hotel-related companies showed vastly better improvement.
Hyatt's net income attributable to Hyatt was $74 million during the second quarter compared to net income attributable to Hyatt of $112 million at the same time last year.
Though revenue increased 3.5 percent, owned and leased hotels expenses increased 4.1 percent in the second quarter compared to the same period in 2013.
Comparable systemwide RevPAR increased 5.5 percent in the quarter over the same period last year. In the U.S., by segments, comparable full-service RevPAR also increased 5.5 percent in the second quarter, while comparable select-service RevPAR increased 8.4 percent.
Occupancy improved to 77 percent in the period from 75.5 percent a year earlier, while the average daily rate climbed 3.4 percent to $181.89.
As of June 30, 2014, the company's executed contract base consisted of approximately 240 hotels or approximately 54,000 rooms.
CEO Mark Hoplamazian said the RevPAR increase was driven by continued transient demand and rate growth. "Looking ahead, we expect strong transient demand in the Americas and U.S. hotel supply growth to remain low in most markets," he said. "U.S. group pace for the coming years continues to improve giving us the confidence that we will continue seeing strong progression in overall rates and higher levels of food and beverage revenues."
Hyatt opened 10 hotels in the quarter, including the Andaz Tokyo Toranomon Hills and Park Hyatt Vienna. "We are on track to open approximately 40 hotels this year, reflecting continued owner preference for our brands," Hoplamazian said.
Two large real estate investment trusts also reported earnings today.
Host Hotels & Resorts said its funds from operations increased 10.3 percent to $0.43 from $0.39 last year. Net income grew 31.4 percent to $159 million from $121 million a year ago. Total revenues grew 2.3 percent to $1.43 billion from $1.40 billion last year.
Host's fundamentals were also strong. Comparable hotel RevPAR was up 5.1 percent, driven by an increase of 4.1 percent in average room rates and average occupancy of 81 percent.
At FelCor Lodging Trust, RevPAR for comparable hotels increased 9.2 percent in the quarter. Adjusted FFO per share improved to $0.26 up from $0.21. Adjusted EBITDA increased $4.6 million to $69.2 million.
"We continue to make very good progress on our portfolio positioning and balance sheet restructuring programs," said Richard Smith, president and CEO of FelCor. "After unwinding some of our joint ventures, we now have 12 remaining non-strategic hotels. We have agreed to sell five of these hotels."
Last, Extended Stay America's revenue increased 9.6 percent to $321.9 million in the second quarter. Net income was $46.3 million, an increase of 23.3 percent. RevPAR grew 9.4 percent.
Extended Stay America’s CEO Jim Donald said of the quarter, "We were pleased with our second quarter revenue growth of 9.6 percent with sequential monthly growth throughout the quarter. Hotels in the post-renovation phase performed well in the quarter and these hotels are producing growth consistent with the ramp-up pattern of our previously completed renovations. Additionally, we continue to make progress on our strategic initiatives to enhance our operations, drive brand awareness and optimize revenue yield. These efforts, coupled with the refinancing of our mezzanine debt and favorable industry trends, will further enhance our strong cash flow for our shareholders in 2014 and beyond."