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Why Is Hyatt Hotels (H) Down 0.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hyatt Hotels due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hyatt Q1 Earnings & Revenues Miss Estimates, Fall Y/Y
Hyatt reported dismal first-quarter 2021 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining sharply on a year-over-year basis. Notably, the top and the bottom line missed the Zacks Consensus Estimate for the fourth straight quarter.
Nonetheless, RevPAR improved sequentially in the first quarter, with comparable system-wide RevPAR as well as owned and leased hotels RevPAR improving modestly. Notably, results in the quarter were favorably impacted by the easing of travel restrictions in certain markets along with strengthened demand for leisure-oriented destinations.
Q1 Earnings & Revenues
During the first quarter, the company reported adjusted loss per share of $3.57, wider than the Zacks Consensus Estimate of a loss of $1.33. In the prior-year quarter, it reported adjusted loss of 35 cents per share. Quarterly revenues of $438 million missed the consensus mark of $479 million by 8.6%. The top line declined 55.9% from the year-ago quarter’s levels.
Operating Highlights
During the quarter, adjusted EBITDA plunged to $(20) million from $86 million reported in the year-ago quarter. Moreover, adjusted EBITDA margin declined to (10.7%) for the first quarter against 18.3% growth in the year-ago quarter.
Segmental Details
Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.
During the first quarter, revenues in the Owned and Leased Hotels segment totaled $104 million, down 67.8% from the year-ago quarter’s number. The downside was primarily caused by the impact of coronavirus pandemic. However, the segment improved meaningfully for the three months (ended Mar 31, 2021) on the back of strong demand. Owned and leased hotels RevPAR declined 64.4% year over year in the quarter. Average daily rate (ADR) was down 29.9% and occupancy rate fell 27.3 percentage points for the first quarter. Meanwhile, adjusted EBITDA declined 183.5% from the prior-year quarter’s figure to $(29) million. At constant currency, the same declined 184.7% from the year-ago quarter’s figure.
Meanwhile, total management and franchise fee revenues plunged 40.6% (down 40.7% in constant currency) from the prior-year quarter’s level to $49 million. That said, the metric improved sequentially from $47 million reported in fourth-quarter 2020.
For Americas Management and Franchising, RevPAR for comparable Americas full-service hotels declined 61.8% from the year-ago quarter’s level. While ADR declined 21.8%, occupancy rates fell 27.4 percentage points from the prior-year quarter’s number.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 34.7% year over year. ADR declined 25% and occupancy rates declined 7.3 percentage points from the year-ago quarter’s number.
Adjusted EBITDA fell 59.3% (down 59.2% in constant currency) from the prior-year quarter’s figure to $28 million.
For ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels declined 19.8% from the year-ago quarter’s figure. ADR declined 26.2% year over year. However, occupancy rates increased 3 percentage points from the year-ago quarter’s levels.
Meanwhile, RevPAR for comparable ASPAC select-service hotels was up 40.9% on a year-over-year basis. Occupancy rates increased 21.7 percentage points year over year. However, ADR declined 22.9% on a year-over-year basis.
Adjusted EBITDA was down 39.7% (down 40.8% at constant currency) from the prior-year quarter’s level to $5 million.
For EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR plunged 58.2% from the year-ago quarter’s level due to the COVID-19 crisis. ADR slumped 31% and occupancy rates declined 19.4 percentage points for the quarter.
Adjusted EBITDA plunged 102.5% (down 103.8% at constant currency) on a year-over-year basis.
Balance Sheet
As of Mar 31, 2021, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $1,078 million compared with $1,207 million in the previous quarter. Total debt as of Mar 31, 2021, stood at $3,242 million compared with $3.244 million as of Dec 31, 2020.
The company ended the first quarter with 40,523,505 Class A and 61,238,749 Class B shares issued, as well as outstanding. Notably, it has an undrawn borrowing availability of $1.499 billion under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 23 new hotels (or 3,919 rooms) joined Hyatt's system in the first quarter of 2021. This contributed to a 6.5% increase in net rooms from the first quarter of 2020. As of Mar 31, 2021, the company had executed management or franchise contracts for approximately 490 hotels (or 100,000 rooms).
Approximately 96% of total system-wide hotels were open as of Mar 31, 2021 compared with 94% as on Dec 31, 2020.
2021 Outlook
For 2021, the company expects adjusted selling, general, and administrative expenses to be approximately $240 million and capital expenditures at approximately $110 million. Meanwhile, unit growth in 2021 is anticipated to be more than 5% on a net-rooms basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 10.47% due to these changes.
VGM Scores
At this time, Hyatt Hotels has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hyatt Hotels has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Hyatt Hotels (H) Down 0.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hyatt Hotels due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hyatt Q1 Earnings & Revenues Miss Estimates, Fall Y/Y
Hyatt reported dismal first-quarter 2021 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining sharply on a year-over-year basis. Notably, the top and the bottom line missed the Zacks Consensus Estimate for the fourth straight quarter.
Nonetheless, RevPAR improved sequentially in the first quarter, with comparable system-wide RevPAR as well as owned and leased hotels RevPAR improving modestly. Notably, results in the quarter were favorably impacted by the easing of travel restrictions in certain markets along with strengthened demand for leisure-oriented destinations.
Q1 Earnings & Revenues
During the first quarter, the company reported adjusted loss per share of $3.57, wider than the Zacks Consensus Estimate of a loss of $1.33. In the prior-year quarter, it reported adjusted loss of 35 cents per share.
Quarterly revenues of $438 million missed the consensus mark of $479 million by 8.6%. The top line declined 55.9% from the year-ago quarter’s levels.
Operating Highlights
During the quarter, adjusted EBITDA plunged to $(20) million from $86 million reported in the year-ago quarter. Moreover, adjusted EBITDA margin declined to (10.7%) for the first quarter against 18.3% growth in the year-ago quarter.
Segmental Details
Hyatt manages business through four reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.
During the first quarter, revenues in the Owned and Leased Hotels segment totaled $104 million, down 67.8% from the year-ago quarter’s number. The downside was primarily caused by the impact of coronavirus pandemic. However, the segment improved meaningfully for the three months (ended Mar 31, 2021) on the back of strong demand. Owned and leased hotels RevPAR declined 64.4% year over year in the quarter. Average daily rate (ADR) was down 29.9% and occupancy rate fell 27.3 percentage points for the first quarter.
Meanwhile, adjusted EBITDA declined 183.5% from the prior-year quarter’s figure to $(29) million. At constant currency, the same declined 184.7% from the year-ago quarter’s figure.
Meanwhile, total management and franchise fee revenues plunged 40.6% (down 40.7% in constant currency) from the prior-year quarter’s level to $49 million. That said, the metric improved sequentially from $47 million reported in fourth-quarter 2020.
For Americas Management and Franchising, RevPAR for comparable Americas full-service hotels declined 61.8% from the year-ago quarter’s level. While ADR declined 21.8%, occupancy rates fell 27.4 percentage points from the prior-year quarter’s number.
Meanwhile, RevPAR for comparable Americas select-service hotels was down 34.7% year over year. ADR declined 25% and occupancy rates declined 7.3 percentage points from the year-ago quarter’s number.
Adjusted EBITDA fell 59.3% (down 59.2% in constant currency) from the prior-year quarter’s figure to $28 million.
For ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels declined 19.8% from the year-ago quarter’s figure. ADR declined 26.2% year over year. However, occupancy rates increased 3 percentage points from the year-ago quarter’s levels.
Meanwhile, RevPAR for comparable ASPAC select-service hotels was up 40.9% on a year-over-year basis. Occupancy rates increased 21.7 percentage points year over year. However, ADR declined 22.9% on a year-over-year basis.
Adjusted EBITDA was down 39.7% (down 40.8% at constant currency) from the prior-year quarter’s level to $5 million.
For EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR plunged 58.2% from the year-ago quarter’s level due to the COVID-19 crisis. ADR slumped 31% and occupancy rates declined 19.4 percentage points for the quarter.
Adjusted EBITDA plunged 102.5% (down 103.8% at constant currency) on a year-over-year basis.
Balance Sheet
As of Mar 31, 2021, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $1,078 million compared with $1,207 million in the previous quarter. Total debt as of Mar 31, 2021, stood at $3,242 million compared with $3.244 million as of Dec 31, 2020.
The company ended the first quarter with 40,523,505 Class A and 61,238,749 Class B shares issued, as well as outstanding. Notably, it has an undrawn borrowing availability of $1.499 billion under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 23 new hotels (or 3,919 rooms) joined Hyatt's system in the first quarter of 2021. This contributed to a 6.5% increase in net rooms from the first quarter of 2020. As of Mar 31, 2021, the company had executed management or franchise contracts for approximately 490 hotels (or 100,000 rooms).
Approximately 96% of total system-wide hotels were open as of Mar 31, 2021 compared with 94% as on Dec 31, 2020.
2021 Outlook
For 2021, the company expects adjusted selling, general, and administrative expenses to be approximately $240 million and capital expenditures at approximately $110 million. Meanwhile, unit growth in 2021 is anticipated to be more than 5% on a net-rooms basis.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 10.47% due to these changes.
VGM Scores
At this time, Hyatt Hotels has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hyatt Hotels has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.