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Hyatt Hotels (H) Down 6.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have lost about 6.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Hyatt's Q3 Earnings Top Estimates, Revenues Miss
Hyatt reported mixed third-quarter 2021 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. However, the top and the bottom line increased on a year-over-year basis. The company stated improvements in its revenue per available room (RevPAR) on account of higher demand in the United States and strong recovery in Europe. Also, it noted to have gained momentum in terms of recovery in business and group travel.
Q3 Earnings & Revenues
In the quarter under review, Hyatt’s adjusted earnings per share of $2.31, surpassed the Zacks Consensus Estimate of a loss of 39 cents. In the prior-year quarter, the company reported an adjusted loss of $1.48 per share.
Quarterly revenues of $851 million missed the consensus mark of $860 million by 1.1%. However, the top line surged 113.3% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $110 million against $(48) million reported in the year-ago quarter. Adjusted EBITDA margin increased to 27.4% in the third quarter against a fall of 35% reported 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 third quarter, revenues in the Owned and Leased Hotels segment totaled $263 million compared with $80 million reported in the prior-year quarter. The upside was primarily driven by strong leisure transient demand in the United States coupled with easing of travel restrictions in Europe. However, Owned and leased hotels RevPAR are down 35.5% from 2019 levels. During the quarter, average daily rate (ADR) was up 32.6% and occupancy rate improved 41.3 percentage points from 2020 levels.
The segment’s adjusted EBITDA came in at $51 million during the third quarter against $(56) million reported in the year-ago quarter.
During the quarter, total management and franchise fee revenues came in at $96 million compared with $40 million reported in the year-ago quarter. That said, the metric improved sequentially from $77 million reported in second-quarter 2021.
In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the third quarter) surged 303.1% from the prior-year quarter’s level. While ADR increased 35.1%, occupancy rates increased 35.8 percentage points from the prior-year quarter’s number.
RevPAR for comparable Americas select-service hotels was up 102.4% year over year. ADR increased 29.3% and occupancy rates improved 24.8 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the second quarter came in at $74 million compared with $16 million reported in the year-ago quarter.
For ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the third quarter) increased 5.7% from the year-ago quarter’s figure. ADR increased 11.2% year over year. However, occupancy rates fell 2.1 percentage points from the year-ago quarter’s number.
Meanwhile, RevPAR for comparable ASPAC select-service hotels was down 4.1% on a year-over-year basis. ADR increased 7.3% year over year. However, occupancy rates fell 5.9 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the second quarter came in at $6 million compared with $9 million reported in the year-ago quarter.
For EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 162.6% from the year-ago quarter’s level. ADR increased 3% and occupancy rates improved 28.6 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the second quarter came in at $5 million against $(2) million reported in the year-ago quarter.
Balance Sheet
As of Sep 30, 2021, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $2,418 million compared with $1,144 million in the previous quarter. Total debt as of Sep 30, 2021, stood at $2,988 million compared with $3.246 million as of Jun 30, 2021.
Meanwhile, the company stated undrawn borrowing availability of $1,500 million under Hyatt's revolving credit facility.
Other Business Updates
On Nov 1, 2021, the company stated to have completed the acquisition of Apple Leisure Group. Also, it noted advancement of capital strategy with a new $2-billion commitment for additional asset sales by 2024-end. Given the disposition commitment coupled with the acquisition of Apple Leisure Group's asset light platform, the company anticipates to transform its earnings to approximately 80% fee-based by 2024-end.
Coming to hotel openings, 20 new hotels (or 4,599 rooms) joined Hyatt's system in the third quarter of 2021. This contributed to a 6.9% increase in net rooms from the third quarter of 2020. As of Sep 30, 2021, the company had executed management or franchise contracts for approximately 505 hotels (or 103,000 rooms) compared with 495 hotels (or 101,000 rooms) as of Jun 30, 2021.
Approximately, 99% of total system-wide hotels were open as of Sep 30, 2021 compared with 98% as on Jun 30, 2021.
2021 Outlook
For 2021, the company expects adjusted selling, general and administrative expenses between $240 million and $250 million. Capital expenditures are projected at approximately $110 million. Meanwhile, unit growth in 2021 is anticipated to be more than 6% on a net-rooms basis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 57.06% due to these changes.
VGM Scores
Currently, Hyatt Hotels has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 B. 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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Hyatt Hotels (H) Down 6.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Hyatt Hotels (H - Free Report) . Shares have lost about 6.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Hyatt's Q3 Earnings Top Estimates, Revenues Miss
Hyatt reported mixed third-quarter 2021 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. However, the top and the bottom line increased on a year-over-year basis. The company stated improvements in its revenue per available room (RevPAR) on account of higher demand in the United States and strong recovery in Europe. Also, it noted to have gained momentum in terms of recovery in business and group travel.
Q3 Earnings & Revenues
In the quarter under review, Hyatt’s adjusted earnings per share of $2.31, surpassed the Zacks Consensus Estimate of a loss of 39 cents. In the prior-year quarter, the company reported an adjusted loss of $1.48 per share.
Quarterly revenues of $851 million missed the consensus mark of $860 million by 1.1%. However, the top line surged 113.3% on a year-over-year basis.
Operating Highlights
During the quarter, adjusted EBITDA came in at $110 million against $(48) million reported in the year-ago quarter. Adjusted EBITDA margin increased to 27.4% in the third quarter against a fall of 35% reported 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 third quarter, revenues in the Owned and Leased Hotels segment totaled $263 million compared with $80 million reported in the prior-year quarter. The upside was primarily driven by strong leisure transient demand in the United States coupled with easing of travel restrictions in Europe. However, Owned and leased hotels RevPAR are down 35.5% from 2019 levels. During the quarter, average daily rate (ADR) was up 32.6% and occupancy rate improved 41.3 percentage points from 2020 levels.
The segment’s adjusted EBITDA came in at $51 million during the third quarter against $(56) million reported in the year-ago quarter.
During the quarter, total management and franchise fee revenues came in at $96 million compared with $40 million reported in the year-ago quarter. That said, the metric improved sequentially from $77 million reported in second-quarter 2021.
In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the third quarter) surged 303.1% from the prior-year quarter’s level. While ADR increased 35.1%, occupancy rates increased 35.8 percentage points from the prior-year quarter’s number.
RevPAR for comparable Americas select-service hotels was up 102.4% year over year. ADR increased 29.3% and occupancy rates improved 24.8 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the second quarter came in at $74 million compared with $16 million reported in the year-ago quarter.
For ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the third quarter) increased 5.7% from the year-ago quarter’s figure. ADR increased 11.2% year over year. However, occupancy rates fell 2.1 percentage points from the year-ago quarter’s number.
Meanwhile, RevPAR for comparable ASPAC select-service hotels was down 4.1% on a year-over-year basis. ADR increased 7.3% year over year. However, occupancy rates fell 5.9 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the second quarter came in at $6 million compared with $9 million reported in the year-ago quarter.
For EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 162.6% from the year-ago quarter’s level. ADR increased 3% and occupancy rates improved 28.6 percentage points from the year-ago quarter’s number.
Adjusted EBITDA during the second quarter came in at $5 million against $(2) million reported in the year-ago quarter.
Balance Sheet
As of Sep 30, 2021, Hyatt reported cash and cash equivalents (including investments in highly-rated money market funds and similar investments) of $2,418 million compared with $1,144 million in the previous quarter. Total debt as of Sep 30, 2021, stood at $2,988 million compared with $3.246 million as of Jun 30, 2021.
Meanwhile, the company stated undrawn borrowing availability of $1,500 million under Hyatt's revolving credit facility.
Other Business Updates
On Nov 1, 2021, the company stated to have completed the acquisition of Apple Leisure Group. Also, it noted advancement of capital strategy with a new $2-billion commitment for additional asset sales by 2024-end. Given the disposition commitment coupled with the acquisition of Apple Leisure Group's asset light platform, the company anticipates to transform its earnings to approximately 80% fee-based by 2024-end.
Coming to hotel openings, 20 new hotels (or 4,599 rooms) joined Hyatt's system in the third quarter of 2021. This contributed to a 6.9% increase in net rooms from the third quarter of 2020. As of Sep 30, 2021, the company had executed management or franchise contracts for approximately 505 hotels (or 103,000 rooms) compared with 495 hotels (or 101,000 rooms) as of Jun 30, 2021.
Approximately, 99% of total system-wide hotels were open as of Sep 30, 2021 compared with 98% as on Jun 30, 2021.
2021 Outlook
For 2021, the company expects adjusted selling, general and administrative expenses between $240 million and $250 million. Capital expenditures are projected at approximately $110 million. Meanwhile, unit growth in 2021 is anticipated to be more than 6% on a net-rooms basis.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 57.06% due to these changes.
VGM Scores
Currently, Hyatt Hotels has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, 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 B. 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.