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Hyatt (H) Q2 Earnings & Revenues Beat Estimates, Stock Up

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Hyatt Hotels Corporation (H - Free Report) delivered impressive second-quarter 2022 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The metrics increased on a year-over-year basis. Following the announcement, shares of the company moved up 3.3% in the pre-market trading session.

Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, stated, "Our second quarter results serve as clear evidence of the earnings power of Hyatt as we continue to transform our business. Total fee revenue exceeded $200 million and was 27% higher than any other quarter in the Company’s history driven by a record level of leisure transient revenue and rapidly improving group and business transient demand.”

Q2 Earnings & Revenues

During the second quarter, Hyatt reported adjusted earnings per share (EPS) of 46 cents, beating the Zacks Consensus Estimate of a loss of 1 cent. In the prior-year quarter, the company reported an adjusted loss of $1.15 per share.

Hyatt Hotels Corporation Price, Consensus and EPS Surprise

 

Hyatt Hotels Corporation Price, Consensus and EPS Surprise

Hyatt Hotels Corporation price-consensus-eps-surprise-chart | Hyatt Hotels Corporation Quote

 

Quarterly revenues of $1,483 million beat the consensus mark of $1,363 million. Moreover, the top line surged 123.7% on a year-over-year basis.

Operating Highlights

During the quarter, adjusted EBITDA came in at $255 million compared with $55 million reported in the year-ago quarter. Adjusted EBITDA margin increased to 30% in the second quarter compared with 17.9% 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 second quarter, revenues in the Owned and Leased Hotels segment totaled $331 million compared with $191 million reported in the prior-year quarter. The upside was primarily driven by improved demand across the portfolio. Owned and leased hotels’ RevPAR surged 140% from the prior-year quarter’s level. During the quarter, the average daily rate (ADR) was up 35.2% and the occupancy rate increased 30.8 percentage points from 2021 levels.

The segment’s adjusted EBITDA came in at $99 million during the first quarter compared with $12 million reported in the year-ago quarter.

During the quarter, total Management and Franchise fee revenues came in at $204 million compared with $93 million reported in the year-ago quarter. The metric rose sequentially from $135 million reported in first-quarter 2022.

In Americas Management and Franchising, RevPAR for comparable Americas full-service hotels (during the second quarter) surged 112% from the prior-year quarter’s level. While ADR increased 28.5%, occupancy rates increased 27.7 percentage points from the prior-year quarter’s number.

RevPAR for comparable Americas select-service hotels was up 55.2% year over year. ADR increased 31.3% and occupancy rates improved 11.6 percentage points from the year-ago quarter’s number.

Adjusted EBITDA during the first quarter came in at $117 million compared with $54 million reported in the year-ago quarter.

In ASPAC Management and Franchising, RevPAR for comparable ASPAC full-service hotels (during the second quarter) increased 0.8% from the year-ago quarter’s figure. ADR increased 6.2% year over year. However, occupancy rates declined 2.3 percentage points from the year-ago quarter’s number.

RevPAR for comparable ASPAC select-service hotels was down 22.6% on a year-over-year basis. ADR declined 4.5% year over year. However, occupancy rates fell 11.6 percentage points from the year-ago quarter’s number.

During the quarter, adjusted EBITDA came in at $6 million compared with $10 million reported in the year-ago quarter.

In EAME/SW Asia Management and Franchising, comparable EAME/SW Asia full-service hotels’ RevPAR surged 239.9% from the year-ago quarter’s level. ADR increased 49.3% and occupancy rates rose 36.6 percentage points from the year-ago quarter’s number.

Adjusted EBITDA during the first quarter came in at $13 million against a loss of $1 million reported in the year-ago quarter.

In the Apple Leisure Group (or ALG) segment, adjusted EBITDA during the second quarter came in at $54 million compared with $56 million reported in the previous quarter. Solid demand for leisure destinations, coupled with increased airlift capacity and a favorable pricing environment, added to the upside. During the quarter, the ALG segment added 10 resorts (or 2,502 rooms).

Balance Sheet

As of Jun 30, 2022, Hyatt reported cash and cash equivalents of $1,955 million compared with $1,305 million reported in the previous quarter. Total debt as of Jun 30, 2022, stood at $3,804 million compared with $3,821 million as of Mar 31, 2021.

The company stated undrawn borrowing availability of $1,496 million under Hyatt's revolving credit facility.

Other Business Updates

Coming to hotel openings, 28 new hotels (or 5,510 rooms) joined Hyatt's system in the second quarter of 2022. As of Jun 30, 2022, Hyatt executed management or franchise contracts for approximately 550 hotels (or 113,000 rooms).

During the second quarter, the company made significant progress with respect to its $2.0 billion asset disposition commitment. The company completed sale agreements for assets (valued at $812 million) related to its owned and leased portfolio. The properties include Hyatt Regency Indian Wells Resort & Spa, Grand Hyatt San Antonio River Walk, The Driskill and The Confidante Miami Beach. On Aug 3, the company entered into an agreement with an unrelated third party for the acquisition of Hotel Irvine (for approximately $135 million). The company is optimistic to realize 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% on a net-room basis.

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 Consumer Discretionary sector are Playa Hotels & Resorts N.V. (PLYA - Free Report) , Marriott International, Inc. (MAR - Free Report) and Choice Hotels International, Inc. (CHH - Free Report) .

Playa Hotels sports a Zacks Rank #1. PLYA has a trailing four-quarter earnings surprise of negative 8.8%, on average. The stock has gained 5.8% in the past year.

The Zacks Consensus Estimate for PLYA’s current financial year sales and EPS indicates an increase of 52.5% and 183.33%, respectively, from the year-ago period’s reported levels.

Marriott carries a Zacks Rank #2 (Buy). MAR has a trailing four-quarter earnings surprise of 18.6%, on average. The stock has increased 15.4% in the past year.

The Zacks Consensus Estimate for MAR’s current financial year sales and EPS indicates growth of 46.1% and 101.6%, respectively, from the year-ago period’s reported levels.

Choice Hotels carries a Zacks Rank #2. CHH has a trailing four-quarter earnings surprise of 11.2%, on average. The stock has declined 5.3% in the past year.

The Zacks Consensus Estimate for CHH’s current financial year sales and EPS indicates growth of 13.6% and 20.3%, respectively, from the year-ago period’s reported levels.