Hyatt Hotels Corporation, for the fourth quarter and full-year ending Dec. 31, 2021, reported the net loss attributable to Hyatt was $29 million, or $0.26 per diluted share, in Q4, compared to net loss attributable to Hyatt of $203 million, or $2.00 per diluted share, in the same period of 2020. Adjusted net loss attributable to Hyatt was $306 million, or $2.78 per diluted share, in the fourth quarter of 2021, compared to adjusted net loss attributable to Hyatt of $179 million, or $1.77 per diluted share, in the fourth quarter of 2020.
“2021 was a transformative year for our company,” said Mark S. Hoplamazian, president/CEO. “We completed the largest acquisition in the history of Hyatt with Apple Leisure Group [ALG], realized approximately $630 million of gross proceeds from owned hotel dispositions and had another year of industry-leading net rooms growth driven by a record year of new hotel openings. The performance of our core business continues to strengthen, fueled by recovering demand and excellent operational execution.”
On Nov. 1, 2021, the company completed the acquisition of ALG. Fourth-quarter and full-year 2021 financial results reflect two months of ALG performance. ALG’s contribution to adjusted EBITDA does not include net deferrals and net financed contracts.
Q4 2021 results:
- Net loss decreased to $29 million from a loss of $203 million in the same period in 2020.
- Adjusted EBITDA increased to $112 million from a loss of $98 million in Q4 2020.
- ALG contributed $4 million of adjusted EBITDA.
- Adjusted EBITDA does not include ALG’s net deferrals of $19 million and net financed contracts of $8 million.
- Comparable system-wide RevPAR increased to $96.75 in the fourth quarter of 2021 and decreased 26.1% compared to the fourth quarter of 2019 on a reported basis.
- Comparable owned and leased hotels’ operating margins were 24.8% in Q4 2021.
Fiscal-year 2021 results:
- Net loss decreased to $222 million from a loss of $703 million in 2020.
- Adjusted EBITDA increased to $257 million from a loss of $177 million in 2020.
- ALG contributed $4 million of adjusted EBITDA.
- Adjusted EBITDA does not include ALG’s net deferrals of $19 million and net financed contracts of $8 million.
- Comparable systemwide RevPAR increased to $77.80 in fiscal-year 2021 and decreased 42.9% compared to fiscal-year 2019 on a reported basis.
- Systemwide net rooms growth was 19.5% in 2021. Excluding the acquisition of ALG, net rooms growth was 6.1%.
- The pipeline of executed management or franchise contracts increased 12% to approximately 113,000 rooms. Excluding the acquisition of ALG, the pipeline increased 3% to approximately 104,000 rooms.
Hoplamazian added, “We opened 99 Hyatt hotels in 2021, a new record, excluding ALG’s contribution. Our strong organic growth paired with the acquisitions of ALG this past year and Two Roads in 2018 have transformed our portfolio. We have doubled the number of luxury rooms, tripled the number of lifestyle rooms, and tripled the number of resort rooms in only four years. Our portfolio is uniquely positioned to benefit from the strengthening demand environment ahead, especially for our high-end travelers.”
Operational update
Comparable systemwide RevPAR in comparison with 2019 levels recovered to 74% in the fourth quarter on a reported basis and 84% in December 2021, before softening to 63% in January 2022, due to the impact of the Omicron variant. Comparable systemwide RevPAR in February 2022 is trending at approximately 68% of 2019 levels through the first two weeks of the month with notable RevPAR acceleration of over 20% for the trailing seven-day period as of mid-February compared to the same seven-day period two weeks prior.
Forward booking trends have also experienced notable acceleration. Gross transient revenue booked for future periods was approximately 77% of 2019 levels in January and has accelerated to 95% month-to-date through mid-February. Gross group room revenue booked for Americas full-service managed properties in January for stay dates in 2022 was 114% of 2019 levels and has accelerated further through mid-February.
Net package RevPAR for comparable ALG resorts in the Americas in comparison with 2019 levels was 85% in January. Gross package revenue booked for future periods was approximately 93% of 2019 levels in January and has accelerated to more than 135% of 2019 levels month-to-date through mid-February.
Fourth-quarter results
Fourth quarter of 2021 financial results as compared to the fourth quarter of 2020 are as follows:
Management, franchise and other fees
Total management and franchise fee revenues increased to $124 million in the fourth quarter of 2021 compared to $47 million reported in the fourth quarter of 2020 and reflected a sequential improvement from $96 million reported in the third quarter of 2021. Base management fees increased to $59 million, incentive management fees increased to $28 million, and franchise fees increased to $37 million during the quarter. Other fee revenues increased to $25 million in the fourth quarter.
Americas management and franchising segment
Americas management and franchising segment adjusted EBITDA increased to $75 million in the fourth quarter of 2021 compared to $9 million reported in the fourth quarter of 2020. Results were led by increases in base and franchise fees with total franchise fees exceeding 2019 levels on a reported basis.
Americas net rooms increased 4.9% compared to the fourth quarter of 2020.
ASPAC management and franchising segment
Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia (ASPAC) management and franchising segment adjusted EBITDA decreased to $8 million in the fourth quarter of 2021 compared to $9 million reported in the fourth quarter of 2020. Results reflect lower demand from Greater China while the remainder of the region experienced improving demand and an increase in fees.
ASPAC net rooms increased 7.7% compared to the fourth quarter of 2020.
EAME/SW Asia Management and franchising segment
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) management and franchising segment adjusted EBITDA increased to $13 million in the fourth quarter of 2021 compared to $(3) million reported in the fourth quarter of 2020. Results across the region were led by stronger demand in certain parts of Europe and in the Middle East driven by the Dubai Expo.
EAME/SW Asia net rooms increased 9.9% compared to the fourth quarter of 2020.
Apple Leisure Group segment
On Nov. 1, 2021, the company completed the acquisition of ALG for a purchase price of $2.7 billion, net of cash acquired. As of Dec., 31, 2021, the acquisition of ALG added 99 resorts (or approximately 32,000 rooms) and a pipeline of approximately 9,000 rooms.
ALG is reported as one segment and derives its earnings through management and marketing services for all-inclusive resorts within the AMR Collection, a paid membership club offering through the Unlimited Vacation Club, and distribution and destination management services offered through ALG Vacations.
In November and December, total ALG segment adjusted EBITDA was $4 million. Adjusted EBITDA does not include ALG’s net deferrals of $19 million and net financed contracts of $8 million.
Deferred revenue from the Unlimited Vacation Club business increased by $35 million and deferred costs increased by $16 million resulting in net deferrals of $19 million. The Unlimited Vacation Club net financed contracts increased $8 million.
Owned and leased hotels segment
Total owned and leased hotels segment adjusted EBITDA increased to $57 million in the fourth quarter of 2021 compared to a loss of $48 million reported in the fourth quarter of 2020 driven by improved demand across the portfolio with all hotels reopened by the end of 2021. Owned and leased hotels segment comparable margins improved to 24.8%, reflecting strong operational execution and ADRs.
Corporate and other
Corporate and other adjusted EBITDA increased to a loss of $45 million in the fourth quarter of 2021 compared to a loss of $65 million reported in the fourth quarter of 2020. The favorability to the fourth quarter of 2020 was primarily driven by a non-recurring expense to provide necessary system-wide services and programs to hotel owners in 2020. This was partially offset by increases in certain selling, general and administrative expenses, including payroll and related costs, and $6 million of integration-related costs associated with the ALG acquisition.
Selling, general and administrative expenses
Selling, general and administrative expenses increased 9.8% inclusive of the rabbi trust impact and stock-based compensation. Adjusted selling, general and administrative expenses increased 44.3% or $32 million, primarily due to the addition of ALG adjusted selling, general, and administrative expenses for the two months post-acquisition, an increase in accrued bonus expense, and ALG integration costs.
Openings and future expansion
In the fourth quarter of 2021, 128 new hotels (or 37,014 rooms) joined Hyatt’s system (including Thompson Buckhead, shown above), inclusive of 99 hotels (or 31,887 rooms) from the acquisition of ALG. In fiscal-year 2021, 198 new hotels (or 49,834 rooms) joined Hyatt’s system, inclusive of the hotels from the acquisition of ALG. Additionally, 17 properties (or 3,076 rooms) converted to a Hyatt brand during 2021.
As of Dec. 31, 2021, the company had a pipeline of executed management or franchise contracts for approximately 540 hotels (approximately 113,000 rooms), inclusive of ALG’s pipeline contribution of approximately 30 hotels (or approximately 9,000 rooms).
Transaction/capital strategy
During the fourth quarter, the company completed the following transactions related to its owned and leased portfolio:
Hyatt Regency Bishkek—a Hyatt affiliate sold its interest in the hospitality venture that owns Hyatt Regency Bishkek to the company’s hospitality partner for approximately $3 million and entered into a long-term management agreement upon sale.
Hyatt Regency Miami— a Hyatt affiliate contributed Hyatt Regency Miami to a newly formed hospitality venture for approximately $22 million and retained a long-term management agreement.
The company intends to successfully execute plans to sell approximately $2 billion of real estate by the end of 2024 as part of its expanded asset-disposition commitment announced in August 2021.
2022 Outlook
The company is providing the following guidance for the 2022 fiscal year:
- Adjusted selling, general and administrative expenses are expected to be approximately $460 million to $465 million. This includes selling, general and administrative expenses associated with the acquisition of ALG, of which $25 million to $30 million is related to one-time integration costs in 2022.
- Excluding ALG, adjusted selling, general and administrative expenses are expected to be approximately $300 million to $305 million, and include $25 million to $30 million related to one-time integration costs in 2022.
- ALG adjusted selling, general and administrative expenses are expected to be approximately $160 million.
- Capital expenditures are expected to be approximately $215 million.
- Hyatt capital expenditures, excluding ALG, are expected to be approximately $190 million.
- ALG capital expenditures are expected to be approximately $25 million.
- The company expects to grow net rooms by approximately 6.0%.
