Hyatt Hotels Corporation, for the three months ended June 30, reported system-wide RevPAR increased 15% compared to the same period last year. Net income was $68 million in the second quarter of 2023 compared to $206 million in the second quarter of 2022.
“For the fifth consecutive quarter, we posted record results demonstrating our unique positioning and continued momentum,” said Mark S. Hoplamazian, president/CEO, Hyatt. “System-wide RevPAR expanded 15% year-over-year, generating a record level of total fee revenue in the quarter. We updated our full-year RevPAR outlook, and we expanded our pipeline to 119,000 rooms, representing approximately 40% of our existing portfolio. Our outlook remains optimistic, fueled by strong group booking activity during the quarter, resulting in 2024 group pace up 10%. We believe our increasing asset-light earnings mix and free cash flow define a clear path for continued success and enhanced shareholder value into the future.”
Highlights include:
- Adjusted net income was $88 million in the second quarter of 2023 compared to $51 million in the second quarter of 2022. Net income in the second quarter of 2022 included $251 million of gains recognized on the sales of real estate.
- Adjusted EBITDA was $273 million in the second quarter of 2023 compared to $255 million in the second quarter of 2022.
- Adjusted EBITDA does not include Net Deferrals of $28 million and Net Financed Contracts of $14 million in the second quarter of 2023, and Net Deferrals of $25 million and Net Financed Contracts of $15 million in the second quarter of 2022.
- Comparable owned and leased hotels RevPAR increased 10.1% in the second quarter of 2023 compared to 2022.
- Comparable owned and leased hotels operating margins were 26.2% in the second quarter of 2023.
- Comparable All-inclusive Net Package RevPAR increased 9.5% in the second quarter of 2023 compared to 2022.
- Net rooms growth was approximately 6.9% in the second quarter of 2023.
- Pipeline of executed management or franchise contracts was approximately 119,000 rooms.
Operational update
In the second quarter of 2023, comparable system-wide RevPAR was up 15% compared to the second quarter of 2022, and up 8% compared to the second quarter of 2019 for the same set of comparable properties. In the second quarter of 2023, average rate growth remained strong, up 5% on a constant currency basis, while occupancy improved 660 basis points, as compared to the same period in 2022. Comparable net package RevPAR for ALG properties increased 8% in the second quarter of 2023 compared to the same period in 2022.
A record level of total management, franchise, license and other fees of $248 million were generated in the second quarter of 2023, up 21% compared to the second quarter of 2022. Fee revenue growth was driven by continued strong global top line performance and flow-through in addition to the contribution from industry leading net rooms growth.
Segment results and highlights
Owned and leased hotels segment: Results were led by growth in group and business transient travel, along with sustained demand in leisure transient travel. Comparable margins remained strong, up nearly 300 basis points compared to the same period in 2019. Higher occupancy and food and beverage revenue mix led to higher costs, and impacted owned and leased margins when compared to 2022. When adjusted for the net impact of transactions, owned and leased adjusted EBITDA decreased $2 million, or 2%, compared to the second quarter of 2022 and increased $11 million, or 15%, compared to the second quarter of 2019.
Americas management and franchising segment: Results were led by sustained strength of leisure travel demand and improved business travel demand. Large convention hotels demonstrated strong performance. New hotels added to the system since the start of 2019 contributed $21 million in fee revenue in the quarter.
ASPAC management and franchising segment: Results were led by broad recovery across the region. Notably, RevPAR in Greater China exceeded 2019 levels by 6% during the quarter.
EAME management and franchising segment: Results were led by Western Europe, which benefited from strong international inbound demand and increased airlifts into the region.
Apple Leisure Group segment: Results reflect sustained strength in leisure travel and favorable pricing. Foreign currency exchange rates and one-time strategic investments negatively impacted ALG’s adjusted EBITDA.
Openings and development
During the second quarter, 24 new hotels (or 5,927 rooms) joined Hyatt’s system. Notable openings in the quarter included Andaz Nanjing Hexi, Grand Hyatt La Manga Club Golf & Spa, Hyatt Regency Mexico City Insurgentes, Impression Isla Mujeres by Secrets and The Pell, part of JdV by Hyatt.
As of June 30, the company had a pipeline of executed management or franchise contracts for approximately 585 hotels (approximately 119,000 rooms).
Transactions and capital strategy
On June 2, the company completed the acquisition of Smith Global Limited (Mr & Mrs Smith) and paid cash of 58 million pounds (approximately $72 million, or $50 million net of cash acquired, using exchange rates as of the acquisition date). The acquisition adds more than 1,500 boutique and luxury properties in more than 20 new countries to World of Hyatt.
The company is making progress on the two previously announced assets marketed for sale. It remains committed to successfully executing 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 June 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’s outlook for full-year 2023 includes a system-wide RevPAR increase of 14% to 18% vs. 2022, net rooms growth of approximately 6% and net income of approximately $215 million.
