In the second quarter of 2021, Hyatt Hotels Corp. reported improved comparable systemwide revenue per available room. “While we anticipated to see marked improvement, our adjusted [earnings before interest, taxes, depreciation and amortization] for the quarter significantly exceeded our expectations,” said Mark S. Hoplamazian, president and CEO of Hyatt Hotels Corp. in a call with investors. “The swift pace of our recovery so far demonstrates the operating leverage within our business as we translate an improving RevPAR environment into revenue growth and margin expansion.”
Comparable systemwide RevPAR increased nearly 30 percent from April to June 2021, reaching the highest level since February 2020. Results in the second quarter were driven by strong leisure transient demand, particularly in the United States and Greater China, where leisure transient revenue was fully recovered to 2019 levels. Group and business transient demand also gained momentum through the quarter.
Demand has steadily improved since January, Hoplamazian said during the call, with double-digit RevPAR growth in each successive month compared to the prior month. “The most pronounced period of RevPAR acceleration commenced with Memorial Day weekend in the United States and continued through July, driven by a wave of leisure transient demand.”
Systemwide RevPAR was trending approximately 50 percent of 2019 levels just prior to Memorial Day and has grown to nearly 75 percent of 2019 levels for the month of July, with RevPAR ending at approximately $100. At the same time, rates are nearing fully recovered levels.
Operating cash flow was positive for the quarter, and improved more than $40 million from Q1. “We do find ourselves experiencing very different demand profiles throughout the world,” Hoplamazian said. “The overall recovery thus far has been much quicker than we predicted and leisure demand is at a record high in certain markets.” Still, COVID-19 is also driving demand to historic lows in some markets, he noted. “But it's clear in our second quarter results that when restrictions are used and people are able to travel safely, the desire to get back to travel and back to hotels is stronger than it's ever been.”
As of June 30, 98 percent of Hyatt’s systemwide hotels (97 percent of rooms) were open. Of that, 97 percent of Hyatt's owned and leased hotels (92 percent of rooms) were open.
Transaction and Capital Strategy Update
On June 3, a Hyatt affiliate acquired the 59-room Ventana Big Sur, an Alila Resort, located in Big Sur, California for approximately $148 million. A day later, a Hyatt affiliate sold the 490-room Hyatt Regency Lost Pines Resort and Spa near Austin, Texas, for approximately $275 million to an unrelated third party and entered into a long-term management agreement. The price, Hoplamazian noted, was above the company’s pre COVID-19 expectations.
Related: Hyatt sells, acquires properties as part of capital strategy
“With the completion of these asset transactions, we realized net proceeds of approximately $1.1 billion since the time of our [capital strategy] announcement in March 2019,” Hoplamazian said. As of June 30, the company has realized net proceeds of approximately $1.1 billion towards that goal while continuing to expand its management and franchising business.
In addition to these two deals, the company is in advanced stages for the disposition of two other assets in the aggregate amount of $500 million. “Should we successfully close the two transactions, we will exceed our $1.5 billion assets sell-down commitment to do so well before our target date, and at an aggregate multiple in the high teens.”
Openings And Future Expansion
Twenty-seven new hotels with 4,302 rooms opened in the second quarter of 2021, contributing to a 7.1 percent increase in net rooms compared to the second quarter of 2020.
As of June 30, the company had executed management or franchise contracts for approximately 495 hotels (or approximately 101,000 rooms). This compares to approximately 490 hotels (or approximately 100,000 rooms) as of March 31.
Hyatt opened 100 properties over the last twelve months and has a pipeline representing more than 40 percent of the company’s existing rooms. The company expects net rooms growth to be greater than 6 percent for the remainder of the year.