Hyatt Hotels Corp. reported its first-quarter 2021 financial results, with net losses nearly three times what they were in the first quarter of 2020, although revenue showed signs of life.
President and CEO Mark Hoplamazian started the earnings call by acknowledging the impact the COVID-19 pandemic has had on the company. “We still see an elevated level of travel restrictions in various parts of the world as a result of new COVID-19 cases, which remain uncomfortably high, especially in areas such as India and South America,” he said. “Our heart goes out to those being impacted in these hard-hit areas during this incredibly challenging period.”
By the Numbers
Comparable systemwide revenue per available room and comparable owned and leased hotel RevPAR improved in the first quarter of 2021 compared to the fourth quarter of 2020. First quarter systemwide RevPAR declined 49 percent compared to last year, Hoplamazian said, but results varied significantly by month. RevPAR in March finished 54 percent higher than January, “roughly double the rate of growth we typically experienced over this time frame in a stabilized environment,” he noted, and the highest level since the onset of the pandemic.
Occupancy during the first part of the quarter largely mirrored trends in the fourth quarter of last year, with elevated leisure demand in February followed by a “pronounced improvement” in March, driven by spring break in the United States and the easing of travel restrictions in China. Group and business transient demand also gained momentum through the quarter, but at a more modest pace.
“Occupancy at our resorts in the continental United States approached 70 percent over a seven-day stretch in late March, with significant average rate growth of 15 percent over 2019 levels during the same time frame,” Hoplamazian told investors. “For the full month of March, our resorts in the United States experienced an increase in average rate of approximately 4 percent versus 2019 levels for comparable hotels.”
Globally, transient revenue at Hyatt’s resorts is now pacing 20 percent ahead of 2019 levels over the back half of the year, after that revenue segment accounted for approximately 45 percent of the company’s total revenue base for the full year of 2019, and more recently at 67 percent in the first quarter of 2021. “We're confident that our brands are well positioned to outperform in this segment as the recovery unfolds,” Hoplamazian said.
The company's overall adjusted earnings before interest, taxes, depreciation and amortization for March 2021 was positive. Net loss attributable to Hyatt was $304 million in the first quarter of 2021, compared to net loss of $103 million in the first quarter of 2020. Adjusted net loss attributable to Hyatt was $363 million in the first quarter of 2021, compared to adjusted net loss of $35 million in the first quarter of 2020.
Openings and Expansion
As of March 31, 96 percent of all Hyatt hotels (94 percent of rooms) were open, and 85 percent of the company’s owned and leased hotels (83 percent of rooms) were open.
During the first quarter of 2021, Hyatt opened 23 new hotels with 3,919 rooms, contributing to a 6.5 percent increase in net rooms compared to the first quarter of 2020. Notably, the company opened its 1,000th hotel, the Alila Napa Valley in St. Helena, Calif., during the quarter. “This is an impressive milestone in our growth, as we've more than doubled the number of hotels and brands in a span of about eight years,” Hoplamazian said. Three properties converted from other brands during the quarter, two of which joined the JdV and Alila brands, which were acquired from Two Roads Hospitality in 2019.
As of the end of the quarter, the company had executed management or franchise contracts for approximately 490 hotels (or approximately 100,000 rooms).
In March, the company acquired its partner's 50 percent stake in an unconsolidated joint venture that owned the 467-room Grand Hyatt São Paulo for $6 million of cash and recognized a $69 million pretax gain. The company also repaid all third-party mortgage debt on the property, totaling $78 million.
The spring break period in the U.S. provided a preview of pent-up demand for travel, Hoplamazian said, which he anticipates will drive performance through the traditionally heavier leisure period in late Q2 and into Q3.
To capture more of the hybrid business market, Hyatt is partnering with virtual events platform Swapcard to integrate the hotel company’s meeting tools with the tech company’s artificial intelligence. The partnership aims to simplify event planning and execution and unify in-person and virtual attendee experiences. “We've introduced a dedicated team of hybrid event experts who bring deep rooted experience in technology and events to Hyatt and will assist meeting planners with exploring hybrid options and execution,” Hoplamazian said.
The company intends to sell approximately $1.5 billion of real estate by March 2022 as part of its capital strategy announced in March of 2019. As of March 31, the company has realized proceeds of approximately $1 billion toward that goal from the disposition of owned assets.
For the 2021 fiscal year, Hyatt expects to grow units, on a net rooms basis, by more than 5 percent.