RevPAR continues to recover throughout Hyatt portfolio

Hyatt Place and Hyatt House Chicago Medical/University District
The new Hyatt Place and Hyatt House Chicago Medical/University District opened in July as part of a repurposed hospital. Photo credit: Aimbridge Hospitality(Hyatt Hotel Corp.)

Hyatt Hotels Corp. has reported its third-quarter 2020 financial results. Net loss attributable to Hyatt was $161 million for the quarter, compared to net income attributable to Hyatt of $296 million in the same quarter a year ago. Adjusted net loss attributable to Hyatt was $150 million in the third quarter of 2020, compared to adjusted net income attributable to Hyatt of $39 million in the third quarter of 2019. 

“Third-quarter results reflect Hyatt's ability to adapt to a continuously changing and uneven demand environment,” said Mark S. Hoplamazian, president and CEO. “In the third quarter, we doubled the number of roomnights sold compared to the second quarter of 2020. I am exceptionally proud of our hotel teams who gained transient demand market share in the segments and geographies of strongest demand globally as they continue to discover and secure demand from many different sources. I am also very encouraged that we opened 27 new hotels representing over 4,300 new rooms, a record number of hotel openings for any third quarter in our history, while sustaining our pipeline for future growth during this disrupted time.”

Operations

Revenue per available room continued to recover across all of Hyatt’s regions in the third quarter of 2020 with comparable systemwide RevPAR more than doubling sequentially off the low in the second quarter of 2020. The pace of recovery varied by region, and was led by occupancy gains in Greater China and United States select-service hotels.

In the third quarter of 2020, RevPAR at comparable full-service and select-service hotels in the Americas benefited from stronger demand in certain markets within the United States. Within the Asia Pacific region, Greater China continued to lead the RevPAR recovery driven by strong domestic demand. Within the Europe, Africa Middle East/Southwest Asia region, RevPAR benefited from hotel reopenings over the summer holiday. RevPAR at comparable owned and leased hotels moderately increased over the quarter as more hotels resumed operations and leisure transient demand strengthened.

Hyatt continues to reopen hotels where operations had been suspended. As of Sep. 30, 92 percent of total systemwide hotels (88 percent of rooms) were open compared to 80 percent of total systemwide hotels (74 percent of rooms) on June 30.

Preliminary October 2020 comparable systemwide RevPAR estimates reflect a modest sequential improvement compared to the third quarter of 2020, and a decrease of approximately 70 percent compared to October of 2019. These estimates are driven primarily by leisure transient demand. As of Oct. 31, 94 percent of total systemwide hotels (92 percent of rooms) were open.

Total management and franchise fee revenues decreased 69.8 percent to $40 million, reflecting a sequential improvement from $12 million reported in the second quarter of 2020. Base management fees decreased 70.2 percent to $19 million, incentive management fees decreased 81.3 percent to $6 million, and franchise fees decreased 59.0 percent to $15 million. Other fee revenues decreased 17.1 percent to $12 million.

Americas management and franchising segment adjusted earnings before interest, taxes, depreciation and amortization decreased 82.9 percent (82.8 percent decrease in constant currency) to $16 million. At June 30, 61 percent of Hyatt's Americas full-service hotels (58 percent of rooms) and 93 percent of Americas select-service hotels (93 percent of rooms) were open, and throughout the third quarter, operations continued to resume, with 85 percent of Americas full-service hotels (81 percent of rooms) and 98 percent of Americas select-service hotels (98 percent of rooms) open on Sept. 30.

Americas net rooms increased 4.9 percent compared to the third quarter of 2019.

Owned and Leased Hotels

Total owned and leased hotels segment adjusted EBITDA decreased 177.4 percent (177.2 percent decrease in constant currency) to -$56 million. Owned and leased hotels segment results were heavily impacted by the COVID-19 pandemic and by dispositions in 2019. 

As of June 30, 45 percent of Hyatt's owned and leased hotels (38 percent of rooms) were open, and throughout the third quarter, operations continued to resume, with 87 percent of owned and leased hotels (78 percent of rooms) open by Sept. 30.

Corporate and other adjusted EBITDA increased 57.8 percent (57.9 percent increase in constant currency), reflecting an $18 million increase as compared to the third quarter of 2019. This increase was primarily due to reductions in payroll and related costs as a result of cost containment initiatives in 2020 and integration related costs incurred in 2019 associated with the acquisition of Two Roads Hospitality.

Future Expansion

Twenty-seven new hotels (or 4,396 rooms) opened in the third quarter of 2020, contributing to a 6 percent increase in net rooms compared to the third quarter of 2019.

As of Sept. 30, the company had executed management or franchise contracts for approximately 500 hotels (or approximately 101,000 rooms), reflecting an increase of 9.8 percent compared to the third quarter of 2019. The amount of executed management and franchise contracts is unchanged from the quarter ended June 30.

“We expect demand to remain uneven over the coming months and believe the ingenuity and resilience of our teams will enable us to continue to win share and deepen our strong relationships with our loyal guests and customers,” Hoplamazian said. “Furthermore, we believe our strong liquidity position will help to sustain our operations over time and support our long-term growth strategy. During this time, our unwavering commitment to living our purpose to care for our colleagues, guests, owners and communities around the globe is of paramount importance.”