The American upscale hotel group reported enviable growth in RevPAR for its hotels and resort packages in the first quarter of 2024. This was driven in particular by demand in Greater China, Mexico, the Caribbean and the Canary Islands.
The Hyatt Group can congratulate itself on its upscale strategy, with the first quarter of 2024 still auguring well.
The Chicago-based global hotel group has announced a return to its pre-Covid performance in both the leisure and Mice categories.
As of March 31, 2024, Hyatt Hotels Corporation counted over 1,300 hotels and establishments in 78 countries on six continents. This is a more concentrated “curation” than most of its major competitors, who tend to operate around 4,000 to 5,000 establishments, as Tour Hebdo points out. The Hyatt group markets its properties under 29 brands, divided between the Timeless Collection (Park Hyatt®, Grand Hyatt®, Hyatt Vacation Club®, UrCove…), the Boundless Collection (Miraval®, Alila®, Andaz®, Thompson Hotels®, Dream® Hotels… ), the Independent Collection (The Unbound Collection by Hyatt®, Destination by Hyatt®,and JdV by Hyatt®) or under the names Impression by Secrets, Hyatt Ziva®, Hyatt Zilara®, Zoëtry® Wellness & Spa Resorts,,etc.
“Top of the market
Each of these brands is “at the top end of the market, which allows us to maintain a more personalized customer experience and keep our identity”, asserted Michel Morauw, Hyatt’s Managing Director for Northern Europe, last April.
One of his reasons for satisfaction is the fact that World of Hyatt, the group’s loyalty platform, has surpassed “40 million active customers”, a figure that has “quadrupled in the last 4 to 5 years”.
And the group seems to be doing well. “The year is off to a very good start, with gross fee income reaching a record $262 million in the quarter,” points out Mark S. Hoplamazian, Hyatt’s President and CEO. Our pipeline also reached a new record, increasing 10% year-on-year to 129,000 rooms, and we achieved net room growth of 5.5%.”
What’s more, “the significant progress we’ve made on asset disposals is helping to strengthen our low-asset earnings mix, reflecting our execution to permanently reduce property holdings,” further enthuses the executive.
Strong first-quarter performance
In more detail, Hyatt’s performance in the first quarter of 2024 was impressive.
The group posted 5.5% growth in hotel RevPAR and 11% growth in net RevPAR from resort packages, both comparable system-wide to the same period in 2023.
Group net income was $522 million and adjusted net income $75 million. This gives adjusted diluted earnings per share of $0.71.
Adjusted EBITDA for the first quarter was $252 million.
The number of management or franchise contracts executed was around 129,000 rooms.
In the “Management and Franchising” segment, quarterly results “were driven by strong demand in all customer segments”. On a regional level, the Group cites “outbound travel from Greater China”, particularly in “Japan, Thailand and South Korea”, as well as “strong leisure demand in Mexico and the Caribbean for all-inclusive hotels and resorts”. Europe was driven by “impressive growth in net package RevPAR”, boosted in particular by “strong demand for resorts in the Canary Islands”. In the United States, growth “normalized”, with RevPAR up “by around 2%, excluding the Easter impact”.
“Properties and rentals” underperform
By contrast, the “Properties and Rentals” segment underperformed, with a 9% decline in adjusted EBITDA in the first quarter, after adjusting for asset disposals. Hyatt attributes this to “difficult comparisons with 2023, including the Super Bowl in Phoenix, higher real estate taxes, higher salaries and transaction costs related to ongoing asset sales”.
Finally, the “Distribution” segment was “affected by difficult year-on-year comparisons, particularly due to ALG Vacations, which made up for a strong quarter the previous year”.
In the first quarter, Hyatt added 12 new hotels (2,425 rooms) to its portfolio. It inaugurated its first hotel in Kenya, the Hyatt Regency Nairobi Westlands, as well as five new UrCove properties in China, and the Thompson Houston (USA), Secrets Tides Punta Cana (Dominican Republic) and Secrets Playa Blanca Costa Mujeres (Mexico).
As at March 31, 2024, the Group had a pipeline of management or franchise contracts in place for around 670 hotels (approximately 129,000 rooms).
Outlook for 2024 in line with forecasts
For the full year 2024, Hyatt expects system-wide comparable hotel RevPAR to increase by 3% to 5% at constant exchange rates, and net income of $1,135 to $1,195 million.
Adjusted EBITDA for the full year is expected to reach between $1,150 and $1,190 million. This remains “in line with previously provided guidance after adjusting for a $30 million reduction attributed” in particular to sales of the Park Hyatt Zurich, Hyatt Regency San Antonio Riverwalk and Hyatt Regency Green Bay.
For the full year, returns to shareholders are expected to reach between $800 and $850 million.
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Featured Photo: Hyatt Secret Tides Punta Cana, République Dominicaine © Hyatt
