Compared to losses reported in the first quarter of 2022, Hyatt Hotels Corp.’s first quarter 2023 financial results highlight a strong turnaround in a number of fundamentals.
“It was another record-breaking quarter as measured by adjusted [earnings before interest, taxes, depreciation and amortization] plus net deferrals and net finance contracts with the sum of these three numbers up 58 percent above the first quarter of 2022 and 69 percent above the first quarter of 2019, a notable achievement when you consider we sold $2.3 billion in real estate net of acquisitions since 2019,” said Mark S. Hoplamazian, Hyatt’s president and CEO.
Hoplamazian pointed out that that is four consecutive quarters of record results driven by successful asset-light acquisitions and more recently a RevPAR environment that is trending meaningfully above 2019 levels.
Hoplamazian also gave an update on Hyatt Studios, the upper-midscale extended-stay brand it introduced in April.
“I'm thrilled to share that we received an overwhelmingly positive response to the launch of the Hyatt Studios brand from our ownership community with letters of interest representing over 100 hotels,” he said. “We expect construction to begin later this year, and the first Hyatt Studios hotel to open in 2024.”
Highlights from the quarter’s results:
- Adjusted EBITDA was $268 million in the first quarter of 2023 compared to $169 million in the first quarter of 2022.
- Net income was $58 million in the first quarter of 2023 compared to net loss of $73 million in the first quarter of 2022. Adjusted net income was $45 million in the first quarter of 2023 compared to adjusted net loss of $36 million in the first quarter of 2022.
- Comparable systemwide revenue per available room increased 42.9 percent in the first quarter of 2023 compared to 2022.
Operational Update
In the first quarter of 2023, comparable systemwide RevPAR was up 43 percent compared to the first quarter of 2022, or up 6 percent compared to the first quarter of 2019 for the same set of comparable properties. In the first quarter of 2023, the RevPAR recovery continued to be powered by average rate growth, up 12 percent on a constant currency basis, while occupancy improved 1,400 basis points, as compared to the same period in 2022. A record level of total management, franchise, license and other fees of $231 million were generated in the first quarter of 2023, up 50 percent compared to the first quarter of 2022.
The Apple Leisure Group all-inclusive portfolio also experienced strong growth. Comparable net package RevPAR for ALG properties increased 30 percent in the Americas and increased 36 percent in Europe in the first quarter of 2023, compared to the same period in 2022. World of Hyatt member contribution accounted for 21 percent of room nights at ALG properties in the Americas during the quarter.
- Owned and leased hotels segment: Results were led by continued recovery from group and business travel. Additionally, strong operating performance led to improved margins for the comparable set of properties. Owned and leased hotels Adjusted EBITDA increased $44 million, or 151 percent, when adjusted for the net impact of transactions, in the first quarter compared to the same period in 2022.
- Americas management and franchising segment: Results were led by sustained strength of leisure travel demand and continued improvement in business travel demand. Additionally, group showed notable momentum. New hotels added to the system since the start of 2019 contributed $18 million in fee revenue in the quarter.
- ASPAC management and franchising segment: Results were led by broad recovery across the region. Greater China saw significant improvement following the easing of travel restrictions with Mainland China RevPAR exceeding 2019 levels by 10 percent during the quarter.
- EAME management and franchising segment: Results were led by Western Europe which benefited from strong international inbound demand and favorable results in the Middle East. •Apple Leisure Group segment: Results were led by sustained strength of leisure travel demand, favorable pricing, and elevated airlift for key Americas destinations.
Openings and Development
During the first quarter, 28 new hotels (or 5,128 rooms) joined Hyatt's system, inclusive of 12 hotels (or 1,893 rooms) from the acquisition of Dream Hotel Group. Notable openings in the quarter included Andaz Mexico City Condesa, Andaz Pattaya Jomtien Beach, Hyatt Regency London Albert Embankment, and FirstName Bordeaux, a JdV by Hyatt hotel.
As of March 31, 2023, Hyatt had a pipeline of executed management or franchise contracts for approximately 580 hotels (approximately 117,000 rooms).
Transactions and Capital Strategy
As previously disclosed, on Feb. 2, 2023, Hyatt completed the acquisition of Dream Hotel Group and paid cash of $125 million. The terms of the agreement provide for up to an additional $175 million of contingent consideration through 2028 based on certain milestones associated with signed management contracts for future hotel openings.
Hyatt currently is marketing two assets 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 March 31, 2023, the company has realized $721 million of proceeds from the net disposition of real estate as part of this commitment.
Balance Sheet and Liquidity
As of March 31, 2023, Hyatt reported the following:
- Total debt of $3,102 million.
- Pro rata share of unconsolidated hospitality venture debt of $534 million, substantially all of which is non-recourse to Hyatt and a portion of which Hyatt guarantees pursuant to separate agreements.
- Total liquidity of approximately $2.5 billion with $1,051 million of cash and cash equivalents and short-term investments and borrowing availability of $1,496 million under Hyatt's revolving credit facility, net of letters of credit outstanding.
The company is providing the following guidance for full year 2023 (full-year 2023 vs. 2022):
- Systemwide RevPAR growth: 12 percent to 16 percent
- Net rooms growth: approximately 6 percent.