Hyatt Hotels Corporation reported net income of $68 million in the third quarter of 2023, ended Sept. 30, compared to $28 million in the third quarter of 2022. Comparable system-wide RevPAR increased 8.9% in the quarter compared to the same period a year ago.
“We had a tremendous quarter, largely driven by the strength in our core business,” said Mark S. Hoplamazian, president/CEO, Hyatt. “Our third-quarter performance contributed to a 25% improvement in total fees for the first nine months of the year compared to 2022. We expect strong fee growth to continue, fueled by our record pipeline of 123,000 rooms and higher levels of conversion opportunities combined with robust demand for travel around the globe. We continue to successfully execute our asset-light transformation and growth strategy while returning meaningful capital to shareholders.”
Highlights include:
- Adjusted net income was $75 million in the third quarter of 2023 compared to $72 million in the third quarter of 2022.
- Diluted EPS was 63 cents in the third quarter of 2023 compared to 25 cents in the third quarter of 2022. Adjusted diluted EPS was 70 cents in the third quarter of 2023 compared to 64 cents in the third quarter of 2022.
- Adjusted EBITDA was $247 million in the third quarter of 2023 compared to $252 million in the third quarter of 2022.
- Adjusted EBITDA does not include net deferrals and net financed contracts of $35 million in the third quarter of 2023, and net deferrals and net financed contracts of $43 million in the third quarter of 2022.
- Comparable owned and leased hotels RevPAR increased 6.3% in the third quarter of 2023 compared to 2022.
- Comparable owned and leased hotels operating margins were 23.5% in the third quarter of 2023.
- Comparable All-inclusive Net Package RevPAR increased 8.6% in the third quarter of 2023 compared to 2022.
- Net rooms growth was approximately 6.2% in the third quarter of 2023.
- Pipeline of executed management or franchise contracts was approximately 123,000 rooms.
Operational update
A record level of total management, franchise, license and other fees of $250 million were generated in the third quarter of 2023 driven by continued strong global top-line performance and net rooms growth.
Comparable system-wide RevPAR increased 8.9% in the third quarter of 2023, compared to the third quarter of 2022, driven by occupancy up 420 basis points and ADR up 2.6%. Overall demand remained resilient, particularly among leisure guests and group customers.
Comparable Net Package RevPAR for ALG properties increased 8.7% in the third quarter of 2023 compared to the same period in 2022. Booking pace for luxury all-inclusive ALG resorts in Cancun is up 8% for the festive period and up 12% for the first quarter of 2024.
Segment results and highlights
- Owned and leased hotels segment: Results were led by group and sustained leisure travel demand. When adjusted for the net impact of transactions, owned and leased adjusted EBITDA increased $3 million, or 5.5%, compared to the third quarter of 2022 and increased $19 million, or 41.7%, compared to the third quarter of 2019.
- Americas management and franchising segment: Results were led by resilient leisure demand and continued recovery of group. Total fees were up 6.6% compared to the third quarter of 2022, offset by an increase in certain expenses. New hotels added to the system since the start of 2019 contributed $22 million in fee revenue in the quarter.
- ASPAC management and franchising segment: Results were led by recovery across the region. Notably, RevPAR in Greater China was up 56% compared to the third quarter of 2022. Major events, including the G20 Summit, Women’s FIFA World Cup, and Asian Games, contributed to performance.
- EAME management and franchising segment: Results were impacted by a significant termination fee from a pipeline hotel recognized in the third quarter of 2022. Excluding this fee, EAME adjusted EBITDA was up 40%, led by Western Europe, strong international inbound seasonal demand, and increased airlift into the region.
- Apple Leisure Group segment: Results faced headwinds from unfavorable foreign currency, challenging ALG Vacations year-over-year comparisons, and higher travel credits from the third quarter of 2022. Additionally, the Unlimited Vacation Club realized certain incremental costs in part driven by strong engagement from members.
Openings and development
During the third quarter, 20 new hotels (or 3,262 rooms) joined Hyatt’s system. Notable openings included Calistoga Motor Lodge & Spa, seven UrCove properties and Andaz Macau, the largest Andaz-branded property globally with 715 rooms.
As of Sept. 30, the company had a pipeline of executed management or franchise contracts for approximately 600 hotels (approximately 123,000 rooms).
Transactions and capital strategy
On Sept. 28, the company sold its interests in the entities that own the Destination Residential Management business to an unrelated third party for $2 million of base consideration and up to an additional $48 million of contingent consideration to be earned within two years following the sale upon the achievement of certain performance-based metrics and contract extensions.
Hyatt has signed a definitive purchase and sale agreement in October for one asset, expected to close in the fourth quarter of 2023, and has signed a letter of intent for an asset previously marketed for sale, expected to close in the first half of 2024. The company has a signed letter of intent for one additional asset and expects the transaction to close in the first half of 2024. The company launched the marketing process for an additional asset and separately, it has been advancing discussions for off-market transactions related to other properties in the portfolio.
The company remains committed to successfully executing plans to realize $2.0 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 Sept. 30, the company has realized $721 million of proceeds from the net disposition of real estate as part of this commitment.
2023 outlook
The company is providing the following guidance for full-year 2023: system-wide RevPAR up 15% to 16% vs. 2022; net rooms growth of approximately 6%; and net income of ​​approximately $210 million.
