Hyatt Sees 28% RevPAR Decline in Q1

CHICAGO—Hyatt Hotels Corporation has reported its Q1 2020 financial results, citing a RevPAR decline of 28.1% while rooms grew 6.3%. Despite the dip, Hyatt leadership is confident that the company can weather the COVID-19 storm.

During an earnings call, Mark S. Hoplamazian, president/CEO of Hyatt Hotels Corporation, said that 65% of Hyatt’s managed hotel employee base has been furloughed or placed on leave. To aid these employees, there have been salary cuts for Hyatt leadership, and grants have been given through the Hyatt Care Fund and through donations. To date, grants have been given to nearly 500 colleagues and Hyatt plans for thousands more. Hyatt also continues to stay engaged with owners and advocate for government assistance for them.

Hoplamazian said, “As COVID-19 became a global pandemic, we took prompt and meaningful actions to manage the first phase of the impact of the virus. We obtained substantial additional cash, reduced investment and corporate spending to preserve cash and we reduced third-party hotel owners’ direct costs through this period. While we continue to operate in an environment of suppressed demand and great uncertainty, we believe our existing liquidity provides sufficient capacity to cover at least 30 months of operations under current conditions.”

Net loss attributable to Hyatt was $103 million, or $1.02 per diluted share, in the first quarter of 2020, compared to net income attributable to Hyatt of $63 million, or $0.59 per diluted share, in the first quarter of 2019. Adjusted net loss attributable to Hyatt was $35 million, or $0.35 per diluted share, in the first quarter of 2020, compared to adjusted net income attributable to Hyatt of $48 million, or $0.45 per diluted share, in the first quarter of 2019.

Openings and Future Expansion

Despite this unprecedented time for hospitality and travel, Hyatt’s pipeline increased 11% YOY, but Hopalamazian said that the company does expect delays in new openings and deals, but will shift its focus.

“In addition to progressing new development opportunities, we’re focused on conversion opportunities, which may be available in higher than normal volumes given the current conditions,” the CEO said in an earnings call.

Twelve hotels (or 1,820 rooms) opened in the first quarter of 2020, contributing to a 6.3% increase in net rooms compared to the first quarter of 2019. As of March 31, 2020, the company had executed management or franchise contracts for approximately 500 hotels (approximately 101,000 rooms), compared to approximately 455 hotels (approximately 91,000 rooms) at March 31, 2019.

Additional Q1 2020 highlights as compared to the Q1 of 2019:

  • Adjusted EBITDA decreased 54.3% to $86 million, a decrease of 53.9% in constant currency.
  • Comparable system-wide RevPAR decreased 28.1%, including a decrease of 25.8% at comparable owned and leased hotels.
  • Comparable U.S. hotel RevPAR decreased 24.5%; full-service hotel RevPAR decreased 25.2% and select-service hotel RevPAR decreased 23.0%.
  • Net rooms growth was 6.3% in the first quarter of 2020.
  • Comparable owned and leased hotels operating margin decreased 1,060 basis points to 14.5%.
  • Adjusted EBITDA margin of 18.3% decreased 1,010 basis points in constant currency.

Operational Update

Occupancy in Greater China have shown gradual improvement over the past few weeks, with occupancy approaching 25% at the end of April. Other parts of the world remain under quarantines and travel restrictions, which have resulted in significant declines in occupancy with uncertainty surrounding near-term improvement. System-wide occupancy rates as of April 30, 2020, are averaging approximately 15% for hotels that remain operational.

As of April 30, 2020, operations were suspended at approximately 35% of its system-wide hotels. Operations were suspended at 62% of its full-service hotels and 19% of its select-service hotels in the Americas, at 17% of its hotels in the ASPAC region, and at 58% of its hotels in the EAME/SW Asia region. Operations were suspended at 82% of its owned and leased hotels.