Hyatt Hotels Corp. reported net income of $26 million for the fourth quarter of 2023 and $220 million for the full year, exceeding the full-year outlook for 2023. Adjusted net income was $68 million in the fourth quarter and $276 million for the full year of 2023.
Comparable system-wide RevPAR increased 9.1 percent in the fourth quarter and 17 percent for the full year of 2023, compared to the same periods in 2022, and exceeded the full year outlook for 2023. Comparable owned and leased hotels RevPAR increased 5.9 percent in the fourth quarter and 15.5 percent for the full year of 2023, compared to the same periods in 2022. Comparable owned and leased hotels operating margin was 26.2 percent in the fourth quarter and 25.4 percent for the full year of 2023. Comparable net package RevPAR increased 11.3 percent in the fourth quarter and 15.3 percent for the full year of 2023 compared to the same periods in 2022.
Net rooms growth was 5.9 percent for the full year of 2023, in line with the full year outlook for 2023. The pipeline of executed management or franchise contracts was approximately 127,000 rooms.
"The fourth quarter marks the completion of a transformative year and demonstrates the progress towards our strategic vision and earnings evolution," Hyatt President and CEO Mark Hoplamazian said in a statement. "RevPAR growth exceeded the high end of our guidance range and we had industry leading net rooms growth for the seventh consecutive year. This led to a record level of fees and the highest free cash flow in Hyatt's history. We returned $500 million to our shareholders and achieved an asset-light earnings mix of approximately 76 percent for the full year, a testament to the successful execution of our strategy."
Operational Update
A record level of management, franchise, license and other fees of $256 million were generated in the fourth quarter of 2023 driven by continued strong global demand for travel and net rooms growth.
Comparable system-wide RevPAR increased 9.1 percent in the fourth quarter and increased 17 percent for the full year of 2023, compared to the same periods in 2022, driven by the rapid recovery in Greater China and strengthening group demand in the United States. Group booking pace for Americas full-service managed properties is currently up 8 percent for full year 2024 compared to 2023.
Comparable net package RevPAR for Apple Leisure Group properties increased 9.2 percent in the fourth quarter and 13.6 percent for the full year of 2023, compared to the same periods in 2022. The fourth quarter benefited from improved results in Cancun, with comparable net package RevPAR up approximately 10 percent compared to the same period in 2022. In the first quarter of 2024, booking pace for ALG all-inclusive properties in the Americas is up 11 percent for the first quarter of 2024.
Owned and leased hotels segment: Results in the fourth quarter were driven by the recovery of group demand and increased rate growth across group and transient customers which contributed to strong RevPAR growth over the fourth quarter of 2022. Comparable owned and leased hotels operating margin expanded 240 basis points compared to the fourth quarter of 2019 and 310 basis points compared to the full year of 2019.
Americas management and franchising segment: Results in the fourth quarter were driven by improved group and business transient results along with resilient leisure demand. Total fees in the quarter increased 6 percent compared to the fourth quarter of 2022, with RevPAR in the United States up 3 percent in the fourth quarter compared to the same period in 2022, driven by strong group rate.
ASPAC management and franchising segment: Results in the fourth quarter were driven by strength in all customer segments which contributed to RevPAR growth across the sub regions, with Greater China improving 84 percent compared to the fourth quarter of 2022.
EAME management and franchising segment: Results in the fourth quarter were driven by resilient leisure demand and strong business transient and group performance, despite the impact of the 2022 World Cup in Qatar. The region benefited from increased airlift from the United States, Middle East, and China.
Apple Leisure Group segment: Results in the fourth quarter benefited from improved results in Cancun. ALG segment adjusted EBITDA for the quarter increased 33 percent when adjusted for the $23 million non-cash benefit in the fourth quarter of 2022, that did not repeat in 2023, and the unfavorable impact of foreign currency exchange rates from the strengthening Mexican Peso.
Openings and Development
In the fourth quarter, 29 new hotels (or 9,648 rooms) joined Hyatt's portfolio, inclusive of six hotels in Greater China that converted to a Hyatt brand through a strategic relationship with an affiliate of Mumian Hotels. Notable openings included the 2,500 room Rio Hotel & Casino in Las Vegas, Nevada, and the 1,100 room Sunscape Coco Punta Cana and 900 room Sunscape Dominicus La Romana in the Dominican Republic. Hotel Toranomon Hills, part of The Unbound Collection by Hyatt, in Japan, and Ronil Goa, a JdV by Hyatt hotel, in India, also opened during the quarter.
For the full year, 101 new hotels (or 23,965 rooms) joined Hyatt's portfolio, inclusive of 43 hotels (or 13,223 rooms) that converted to a Hyatt brand.
As of Dec. 31, the company had a pipeline of executed management or franchise contracts for approximately 650 hotels (approximately 127,000 rooms), inclusive of 17 Hyatt Studios hotels (approximately 2,000 rooms). During the fourth quarter, the first Hyatt Studios hotel broke ground in Mobile, Ala.
Transactions and Capital Strategy
On Feb. 14, 2024, the company completed a transaction that resulted in the restructuring of the entity that owns our Unlimited Vacation Club business by selling 80 percent of the entity to an investor unaffiliated with Hyatt for $80 million. Hyatt will continue to manage the Unlimited Vacation Club business under a long-term management agreement and license and royalty agreement, ensuring a seamless transition for colleagues, UVC members and hotel owners. As a result of the transaction, the company will receive management fees and royalty fees in relation to the exclusive arrangement between the Hyatt Inclusive Collection brands and UVC, and the company will no longer report net deferrals and net financed contracts.
On Feb. 9, Hyatt sold the Hyatt Regency Aruba Resort Spa and Casino for approximately $240 million to an unrelated third party and entered into a long-term management agreement. As part of the transaction, the company provided approximately $41 million of seller financing.
Hyatt provided updates on the progress for five asset sales. The company has signed definitive purchase and sale agreements for two assets that aggregate to approximately $310 million of expected gross proceeds. Further, the company is marketing one additional asset for sale and is engaged in off-market discussions for two other assets.
The company is still planning to realize $2 billion of gross proceeds from the sale of real estate, net of acquisitions, by the end of 2024 as part of its expanded asset-disposition commitment announced in August 2021, according to the company release. As of Feb. 23, the company has realized $961 million of gross proceeds from the net disposition of real estate, inclusive of Hyatt Regency Aruba Resort Spa and Casino.