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Hyatt (H) Stock Rises on Q3 Earnings Beat and Upbeat View
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Hyatt Hotels Corporation (H - Free Report) delivered impressive third-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top line rose year over year, while the bottom line declined from the prior-year quarter's figure. Following the results, shares of the company moved up 2.2% in the pre-market trading session.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, stated, "We had a tremendous quarter that demonstrates our unique positioning and differentiated model. We reported total fee revenue that exceeded 2019 by 50%, raised our full year 2022 Net Rooms Growth outlook to approximately 6.5%, and expanded our pipeline to 114,000 rooms. We continue to see demand accelerating and our outlook remains optimistic based on our latest booking trends."
Q3 Earnings & Revenues
During the third quarter, Hyatt reported adjusted earnings per share (EPS) of 64 cents, beating the Zacks Consensus Estimate of 31 cents. In the prior-year quarter, the company reported an adjusted EPS of $2.31 per share.
Hyatt Hotels Corporation Price, Consensus and EPS Surprise
Quarterly revenues of $1,541 million beat the consensus mark of $1,490 million by 3.4%. Moreover, the top line surged 81.1% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $252 million compared with $110 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 29.8% in the third quarter compared with 27.4% reported in the year-ago quarter.
Segmental Details
Hyatt manages business through five reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising; and Apple Leisure Group Segment.
During the third quarter, revenues in the Owned and Leased Hotels segment totaled $309 million compared with $263 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Owned and leased hotels’ RevPAR surged 47.4% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 19.4% and the occupancy rate increased 13.1 percentage points from 2021 levels.
The segment’s adjusted EBITDA came in at $66 million during the third quarter compared with $51 million reported in the year-ago quarter.
During the quarter, total Management and Franchise fee revenues came in at $224 million compared with $113 million reported in the year-ago quarter. The metric rose sequentially from $204 million reported in second-quarter 2022.
In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the third quarter) surged 46.3% from the prior-year quarter’s level. While ADR increased 14.5%, occupancy rates increased 15 percentage points from the prior-year quarter’s number.
RevPAR for comparable Americas select-service hotels was up 24.8% year over year. ADR increased 15.2% and occupancy rates improved 5.7 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the third quarter came in at $114 million compared with $74 million reported in the year-ago quarter.
In ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the third quarter) increased 63.8% from the year-ago quarter’s figure. ADR increased 12% and occupancy rates improved 18.4 percentage points from the year-ago quarter’s number.
RevPAR for comparable ASPAC select-service hotels was up 8.9% on a year-over-year basis. However, Occupancy rates improved 5.4 percentage points year over year. However, ADR declined 1.5% from the year-ago quarter’s number.
During the quarter, adjusted EBITDA came in at $15 million compared with $6 million reported in the year-ago quarter.
In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 89.2% from the year-ago quarter’s level. ADR increased 37.8% and occupancy rates rose 17.8 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the third quarter came in at $21 million compared with $5 million reported in the year-ago quarter.
In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the third quarter came in at $78 million compared with $54 million reported in the previous quarter. Solid demand for leisure travel and increased airlift capacity and a favorable pricing environment added to the upside.
Balance Sheet
As of Sep 30, 2022, Hyatt reported cash and cash equivalents of $1,374 million compared with $1,955 million reported in the previous quarter. Total debt as of Sep 30, 2022, stood at $3,804 million, flat sequentially.
The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 22 new hotels (or 4,243 rooms) joined Hyatt's system in the third quarter of 2022. As of Sep 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 114,000 rooms).
The company continues to make significant progress with respect to its $2.0 billion asset disposition commitment. During October, the company completed sale agreements for assets related to its owned and leased portfolio. The properties include Hyatt Regency Greenwich (in Connecticut) and Hyatt Regency Mainz (in Germany). As of Nov 3, 2022, the company has realized proceeds worth $721 million (from the net disposition of owned assets). The company expects to generate approximately $2 billion gross proceeds from the sales of real estate (net of acquisitions) by 2024-end.
2022 Outlook
For 2022, the company expects adjusted selling, general and administrative expenses between $460 million and $465 million. Capital expenditures are projected at approximately $210 million. Unit growth in 2022 is anticipated at approximately 6.5% on a net-room basis, up from the previous projection of approximately 6%.
The company anticipates 2022 system-wide RevPAR to decline 4-7% from 2019 levels.
Marriott sports a Zacks Rank #1. MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has declined 3.1% so far this past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates a surge of 46.8% and 104.1%, respectively, from the year-ago period’s reported levels.
Crocs carries a Zacks Rank #2 (Buy). CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 57.7% in the past year.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.6% and 20.7%, respectively, from the year-ago period’s levels.
Boyd Gaming carries a Zacks Rank #2. BYD has a long-term earnings growth rate of 12.8%. The stock has declined 13.3% in the past year.
The Zacks Consensus Estimate for BYD’s current financial year sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported levels.
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Hyatt (H) Stock Rises on Q3 Earnings Beat and Upbeat View
Hyatt Hotels Corporation (H - Free Report) delivered impressive third-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top line rose year over year, while the bottom line declined from the prior-year quarter's figure. Following the results, shares of the company moved up 2.2% in the pre-market trading session.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, stated, "We had a tremendous quarter that demonstrates our unique positioning and differentiated model. We reported total fee revenue that exceeded 2019 by 50%, raised our full year 2022 Net Rooms Growth outlook to approximately 6.5%, and expanded our pipeline to 114,000 rooms. We continue to see demand accelerating and our outlook remains optimistic based on our latest booking trends."
Q3 Earnings & Revenues
During the third quarter, Hyatt reported adjusted earnings per share (EPS) of 64 cents, beating the Zacks Consensus Estimate of 31 cents. In the prior-year quarter, the company reported an adjusted EPS of $2.31 per share.
Hyatt Hotels Corporation Price, Consensus and EPS Surprise
Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote
Quarterly revenues of $1,541 million beat the consensus mark of $1,490 million by 3.4%. Moreover, the top line surged 81.1% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $252 million compared with $110 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 29.8% in the third quarter compared with 27.4% reported in the year-ago quarter.
Segmental Details
Hyatt manages business through five reportable segments — Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising; and Apple Leisure Group Segment.
During the third quarter, revenues in the Owned and Leased Hotels segment totaled $309 million compared with $263 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Owned and leased hotels’ RevPAR surged 47.4% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 19.4% and the occupancy rate increased 13.1 percentage points from 2021 levels.
The segment’s adjusted EBITDA came in at $66 million during the third quarter compared with $51 million reported in the year-ago quarter.
During the quarter, total Management and Franchise fee revenues came in at $224 million compared with $113 million reported in the year-ago quarter. The metric rose sequentially from $204 million reported in second-quarter 2022.
In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the third quarter) surged 46.3% from the prior-year quarter’s level. While ADR increased 14.5%, occupancy rates increased 15 percentage points from the prior-year quarter’s number.
RevPAR for comparable Americas select-service hotels was up 24.8% year over year. ADR increased 15.2% and occupancy rates improved 5.7 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the third quarter came in at $114 million compared with $74 million reported in the year-ago quarter.
In ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the third quarter) increased 63.8% from the year-ago quarter’s figure. ADR increased 12% and occupancy rates improved 18.4 percentage points from the year-ago quarter’s number.
RevPAR for comparable ASPAC select-service hotels was up 8.9% on a year-over-year basis. However, Occupancy rates improved 5.4 percentage points year over year. However, ADR declined 1.5% from the year-ago quarter’s number.
During the quarter, adjusted EBITDA came in at $15 million compared with $6 million reported in the year-ago quarter.
In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 89.2% from the year-ago quarter’s level. ADR increased 37.8% and occupancy rates rose 17.8 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the third quarter came in at $21 million compared with $5 million reported in the year-ago quarter.
In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the third quarter came in at $78 million compared with $54 million reported in the previous quarter. Solid demand for leisure travel and increased airlift capacity and a favorable pricing environment added to the upside.
Balance Sheet
As of Sep 30, 2022, Hyatt reported cash and cash equivalents of $1,374 million compared with $1,955 million reported in the previous quarter. Total debt as of Sep 30, 2022, stood at $3,804 million, flat sequentially.
The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.
Other Business Updates
Coming to hotel openings, 22 new hotels (or 4,243 rooms) joined Hyatt's system in the third quarter of 2022. As of Sep 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 114,000 rooms).
The company continues to make significant progress with respect to its $2.0 billion asset disposition commitment. During October, the company completed sale agreements for assets related to its owned and leased portfolio. The properties include Hyatt Regency Greenwich (in Connecticut) and Hyatt Regency Mainz (in Germany). As of Nov 3, 2022, the company has realized proceeds worth $721 million (from the net disposition of owned assets). The company expects to generate approximately $2 billion gross proceeds from the sales of real estate (net of acquisitions) by 2024-end.
2022 Outlook
For 2022, the company expects adjusted selling, general and administrative expenses between $460 million and $465 million. Capital expenditures are projected at approximately $210 million. Unit growth in 2022 is anticipated at approximately 6.5% on a net-room basis, up from the previous projection of approximately 6%.
The company anticipates 2022 system-wide RevPAR to decline 4-7% from 2019 levels.
Zacks Rank & Key picks
Hyatt currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Consumer Discretionary sector are Marriott International, Inc. (MAR - Free Report) , Crocs, Inc. (CROX - Free Report) and Boyd Gaming Corporation (BYD - Free Report) .
Marriott sports a Zacks Rank #1. MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has declined 3.1% so far this past year.
The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates a surge of 46.8% and 104.1%, respectively, from the year-ago period’s reported levels.
Crocs carries a Zacks Rank #2 (Buy). CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 57.7% in the past year.
The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.6% and 20.7%, respectively, from the year-ago period’s levels.
Boyd Gaming carries a Zacks Rank #2. BYD has a long-term earnings growth rate of 12.8%. The stock has declined 13.3% in the past year.
The Zacks Consensus Estimate for BYD’s current financial year sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported levels.