Hyatt (H) Earnings and Revenues Surpass Estimates in Q3

Hyatt Hotels Corporation H reported better-than-expected third-quarter 2019 results. With the latest quarterly results, the company’s bottom line has surpassed the Zacks Consensus Estimate for the 15th straight quarter, while the top line has outpaced the same for the third consecutive quarter.

Adjusted earnings came in at 37 cents per share, which outpaced the Zacks Consensus Estimate of 26 cents. In the prior-year quarter, the company reported earnings of 33 cents per share.

Total revenues were $1,215 million, beat the consensus estimate of $1,178 million and improved 13.1% from the prior-year quarter figure.

RevPAR Details

In the reported quarter, comparable system-wide revenues per available room (RevPAR) were flat, taking into account a decrease of 0.1% of the same at comparable owned and leased hotels. RevPAR in the quarter under review was impacted by political turbulence in Hong Kong. However, comparable U.S. hotel RevPAR fell 0.6%. While full-service hotel RevPAR was up 0.2%, that of select service hotel declined 2.3%.

Operating Highlights

Net income increased 25.4% to $296 million in the third quarter. However, adjusted EBITDA decreased 7.3% to $163 million (down 6.5% at constant currency). Moreover, adjusted EBITDA margin contracted 280 bps to 26.9%.

Meanwhile, comparable owned and leased hotels’ operating margin contracted 20 bps to 21%.

Hyatt Hotels Corporation Price, Consensus and EPS Surprise


Hyatt Hotels Corporation Price, Consensus and EPS Surprise

Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote

Segmental Details

Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.

Revenues at Owned and Leased Hotels totaled $425 million, down 3.9% from the year-ago quarter number. Comparable owned and leased hotels RevPAR were down 0.1%. Both ADR and occupancy were flat in the quarter.

Meanwhile, adjusted EBITDA decreased 17.6% to $76 million. At constant currency, the same declined 16.9%.

Revenues at Americas Management and Franchising amounted to $122 million, reflecting a 29.6% increase from the year-ago figure and a 29.9% rise at constant currency.

RevPAR for comparable Americas full-service hotels increased 1.5%. While ADR advanced 0.7%, occupancy increased 70 bps from the year-ago quarter number.

Meanwhile, RevPAR for comparable Americas select-service hotels was down 2.4%. Occupancy and ADR declined 40 bps and 1.8%, respectively, in the quarter under review.

Adjusted EBITDA increased 11.2% (up 11.4% at constant currency) to $92 million.

Revenues at ASPAC Management and Franchising rose 4.2% year over year (up 5.4% at constant currency) to $32 million.

RevPAR for comparable ASPAC full-service hotels declined 2%. Moreover, occupancy and ADR were down 50 bps and 1.3%, respectively, in the quarter.

Adjusted EBITDA inched up 0.9% (up 2.5% at constant currency) to $19 million.

Revenues at EAME/SW Asia Management and Franchising rose 2.2% to $19 million.

Comparable EAME/SW Asia full-service hotels’ RevPAR increased 1.6% due to robust demand certain European markets, which includes France and the U.K., and Southwest Asia, offset marginally by softer performance in Russia. While ADR decreased 2.6%, occupancy rose 290 bps.

Adjusted EBITDA rose 4.8% (were up 7.8% at constant currency) to $12 million.

Balance Sheet

As of Sep 30, 2019, Hyatt reported cash and cash equivalents of $660 million. The total debt was $1.62 billion as of Sep 30, 2019.

During third-quarter 2019, Hyatt repurchased 1,099,507 Class A shares and 677,384 Class B share for nearly $133 million. The company ended third-quarter 2019 with 36,811,374 Class A and 66,438,444 Class B shares issued and outstanding.

2019 Guidance

Hyatt revised 2019 guidance. The company now expects net income of roughly $431-$470 million, up from the prior estimate of $231-$275 million. Adjusted EBITDA is anticipated in the $730-$745 million band compared with $755-$775 million projected earlier. Comparable system-wide RevPAR is expected to increase 0.5% year over year compared with 1-2% anticipated previously.

On a net-rooms basis, Hyatt continues to expect unit growth of roughly 7.25-7.75%, reflecting 85 new hotel openings.

Hyatt, which shares space with Choice Hotels CHH, Hilton HLT and Marriott Vacations Worldwide VAC, has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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