After the pandemic proved the strength of the economy hotel segment, a number of companies have been investing heavily in lower-cost hotels. Not so Hyatt Hotels Corp., which has sharpened its focus on upscale and luxury properties in recent years.
During the company’s fourth quarter and full-year 2022 earnings call with investors, Hyatt President and CEO Mark Hoplamazian, emphasized how the company has “significantly elevated” the quality of its portfolio in a bid to better serve high-end customers. “In only five years, we doubled the number of luxury rooms, tripled the number of resorts, and quadrupled the number of lifestyle rooms in our portfolio,” he said. “And we now have more luxury-branded hotels in resort locations than any other hospitality company in the world.”
In November, the company announced plans to acquire Dream Hotel Group’s lifestyle hotel brand and management platform including the Dream Hotels, The Chatwal Hotels and Unscripted Hotels brands—Hyatt’s fourth major transaction in as many years. The acquisition adds 12 lifestyle hotels (with approximately 1,700 rooms) to the Hyatt portfolio, with an additional 24 signed long-term management agreements for hotels expected to open in the future, which Hoplamazian said will grow Hyatt’s lifestyle room count by more than 10 percent. The deal closed on Feb. 2 with a cash transaction of approximately $125 million. The terms of the agreement provide for up to an additional $175 million of contingent consideration through 2028 as properties come into the pipeline and open. “This asset-light acquisition broadens our reach into a younger demographic, provides a differentiated experience for our guests and expands our presence in New York City by 30 percent,” Hoplamazian told the investors.
Meanwhile, the integration process with Apple Leisure Group, which Hyatt acquired in late 2021 and which Hoplamazian assumed leadership of in October, has gone “extraordinarily well,” Hoplamazian said. “The cultural alignment of the two companies has allowed us to move very quickly. … We largely accomplished everything that we set out to accomplish in 2022.”
Hyatt’s Highlights
- Net income was $294 million in the fourth quarter and $455 million for the full year of 2022. Adjusted net income was $278 million in the fourth quarter and $365 million for the full year of 2022.
- Adjusted earnings before interest, taxes, depreciation and amortization was $232 million in the fourth quarter and $908 million for the full year of 2022. Apple Leisure Group contributed $43 million of adjusted EBITDA in the fourth quarter and $231 million for the full year of 2022.
- Comparable systemwide revenue per available room increased 34.8 percent in the fourth quarter and 60.2 percent for the full year of 2022, compared to 2021.
- Comparable owned and leased hotels revenue per available room increased 41.7 percent in the fourth quarter and 87.6 percent for full-year 2022, compared to 2021. Comparable owned and leased hotels operating margin improved to 27.9 percent in the fourth quarter and to 27.1 percent for the full year of 2022.
- All-inclusive net package RevPAR was $190.64 in the fourth quarter and $187.28 for the full year of 2022.
- Net rooms growth was 6.7 percent for the full year of 2022.
- Pipeline of executed management or franchise contracts was approximately 117,000 rooms, inclusive of ALG's pipeline contribution of 8,000 rooms.
Revenue Growth and Declines
Comparable systemwide RevPAR increased 2.4 percent in the fourth quarter and declined 6.1 percent for the full year of 2022, compared to the same periods in 2019. Excluding Greater China, systemwide RevPAR increased 6.6 percent in the fourth quarter and declined 2.5 percent for the full year of 2022, compared to the same periods in 2019. In the fourth quarter of 2022, the RevPAR recovery continued to be powered by pricing with leisure transient and group average rates up 19 percent and 15 percent compared to 2019 levels, respectively.
Net package RevPAR for the same set of properties managed by ALG in the Americas increased 24.4 percent in the fourth quarter and 12.6 percent for the full year of 2022, compared to the same periods in 2019. Total Net package revenue for all ALG properties increased 65.4 percent in the fourth quarter and 48.2 percent for the full year of 2022, compared to the same periods in 2019, fueled by ALG's net rooms growth in the Americas and expansion into Europe.
Openings and Development
In the fourth quarter, 57 new hotels (or 10,784 rooms) joined Hyatt's system. Notable openings included 31 franchised hotels (or 5,082 rooms), predominately across Germany, as part of Hyatt's agreement with Lindner Hotels & Resorts, Secrets Impression Moxché, Hyatt Centric Ville-Marie Montréal and Fuji Speedway Hotel and Grayson Hotel in New York City, both part of The Unbound Collection by Hyatt portfolio.
For the full year of 2022, 120 new hotels (or 23,227 rooms) joined Hyatt's system with 48 properties (or 8,281 rooms) converted to a Hyatt brand.
As of Dec. 31, the company had a pipeline of executed management or franchise contracts for approximately 580 hotels (approximately 117,000 rooms), inclusive of ALG's pipeline contribution of approximately 20 hotels (or approximately 8,000 rooms).
Capital Strategy and Forecast
The company is marketing two assets held for sale and intends to successfully execute plans 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. As of Dec. 31, the company has realized $721 million of proceeds from the net disposition of real estate as part of this commitment.
For the 2023 fiscal year, Hyatt expects systemwide RevPAR growth of 10 to 15 percent over 2022 and net rooms growth of about 6 percent.