Hyatt today released its fourth quarter and the full 2020 results, and they were what everyone was expecting and already knew – bad.
The hotel company lost $203M in 2020 and has 982 hotels + 16 Residence Club properties. Hyatt is expected to lose 22 Hyatt Place hotels in the US that they will hand over back to the owner (SVC), who will convert them under Sonesta’s brands (read more here).
You can access Hyatt here.
Here’s the information that our readers may find most useful:
Properties by Brand
Hyatt has 982 hotels, of which select-service Hyatt Place and Hyatt House represent close to exactly half (498 hotels).
This image from a month or so ago that doesn’t match precisely with the number below but illustrates Hyatt’s global distribution.
Americas = 237 full service and 446 select service hotels + 8 other franchised hotels (Ziva/Zilara) = 683
Asia-Pacific = 124 full service and 35 select service hotels = 159
EAME/SW Asia = 110 full service and 22 select service hotels = 132
Select service brands are the winners here (Hyatt Place & Hyatt House).
The select-service segment has 43% occupancy in the fourth quarter of 2020 in the Americas that is not bad compared to less than 20% for the full-service segment.
Hyatt has 500 hotels under “pipeline,” of which some may never materialize. 380 of these 50 hotels are in just four countries; the United States (160), China (140), India (50), and Vietnam (10). There is not much left for the rest of the world. Half of the 500 hotels are select service.
Here’s the rather extended release from the Hyatt:
Hyatt Hotels Corporation (“Hyatt” or the “Company”) (NYSE: H) today reported fourth quarter 2020 financial results. Net loss attributable to Hyatt was $203 million, or $2.00 per diluted share, in the fourth quarter of 2020, compared to net income attributable to Hyatt of $321 million, or $3.08 per diluted share, in the fourth quarter of 2019. Adjusted net loss attributable to Hyatt was $179 million, or $1.77 per diluted share, in the fourth quarter of 2020, compared to Adjusted net income attributable to Hyatt of $49 million, or $0.47 per diluted share, in the fourth quarter of 2019. Refer to the table on page 14 of the schedules for a summary of special items impacting Adjusted net income (loss) and Adjusted earnings (losses) per diluted share in the three months ended December 31, 2020 and December 31, 2019.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “I am extremely proud of, and grateful for, the achievements of our teams around the world throughout 2020. The Hyatt family demonstrated resilience in the face of difficult decisions and undertook meaningful action to place Hyatt in a strong position as the recovery unfolds. Amidst a backdrop of challenging operating fundamentals, our net rooms growth was strong, demonstrating the strength of our brands. We opened 72 hotels and entered 27 new markets. Our teams also executed new signings to maintain a pipeline representing over 40% growth of our existing hotel rooms in the future.”
Fourth quarter 2020 financial results as compared to fourth quarter 2019 are as follows:
- Net income (loss) decreased from $321 million to $(203) million.
- Adjusted EBITDA decreased from $191 million to $(98) million, almost half of which relates to costs incurred on behalf of our managed and franchised properties that we do not intend to recover from hotel owners.
- Comparable system-wide RevPAR decreased 68.9%.
As of December 31, 2020, the Company had cash, cash equivalents and short-term investments of $1,882 million.
Fiscal year 2020 financial results as compared to fiscal year 2019 are as follows:
- Net income (loss) decreased from $766 million to $(703) million.
- Adjusted EBITDA decreased from $754 million to $(177) million.
- Comparable system-wide RevPAR decreased 65.4%.
- Net rooms growth of 5.2%.
As of December 31, 2020, the Company’s pipeline consisted of approximately 500 hotels, or approximately 101,000 rooms.
Mr. Hoplamazian continued, “We maintained a very strong liquidity position while the fourth quarter showed a modest sequential improvement in RevPAR. We are prepared for whatever 2021 brings, and we are looking ahead to realize improving financial results as vaccine distribution continues and travel restrictions are lifted over time. We continue to be guided by our purpose of caring for people so they can be their best, and this has sustained and strengthened our culture throughout the past year.”
RevPAR continued to show improvement in the fourth quarter of 2020 with comparable system-wide RevPAR and comparable owned and leased hotels RevPAR improving modestly from the third quarter of 2020. The pace of recovery varied by region, and similar to trends in the third quarter, was led by relative strength in Greater China and United States select service hotels.
Consistent with third quarter trends, occupancy was driven primarily by favorable leisure transient demand, particularly on weekends and holidays in the fourth quarter. Business transient and group demand continued to be muted. Hyatt’s full-service hotels in the Americas were negatively impacted by group cancellations.
Nearly all properties in Hyatt’s system were open at year-end. As of December 31, 2020, 94% of total system-wide hotels (93% of rooms) were open compared to 92% of total system-wide hotels (88% of rooms) at September 30, 2020.
FOURTH QUARTER RESULTS
Fourth quarter of 2020 financial results as compared to the fourth quarter of 2019 are as follows:
Management, Franchise and Other Fees
Total management and franchise fee revenues decreased 67.4% (67.6% in constant currency) to $47 million, reflecting a sequential improvement from $40 million reported in the third quarter of 2020. Base management fees decreased 66.3% to $22 million, incentive management fees decreased 76.6% to $10 million, and franchise fees decreased 57.4% to $15 million. Other fee revenues decreased 31.6% to $12 million.
Americas Management and Franchising Segment
Americas management and franchising segment Adjusted EBITDA decreased 90.3% (90.2% in constant currency) to $9 million, including $9 million of bad debt expense. At September 30, 2020, 85% of Hyatt’s Americas full service hotels (81% of rooms) and 98% of Americas select service hotels and rooms were open, and throughout the fourth quarter, operations continued to resume, with 90% of Americas full service hotels and rooms and 99% of Americas select service hotels and rooms open at December 31, 2020.
Americas net rooms increased 3.5% compared to the fourth quarter of 2019.
Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia (ASPAC) Management and Franchising Segment
ASPAC management and franchising segment Adjusted EBITDA decreased 65.5% (66.8% in constant currency) to $9 million, including $1 million of bad debt expense. At September 30, 2020, 92% of Hyatt’s ASPAC full service hotels (93% of rooms) and 93% of ASPAC select service hotels (89% of rooms) were open, operations continued to resume throughout the fourth quarter resulting in 98% of Hyatt’s ASPAC full service hotels (99% of rooms) and 97% of ASPAC select service hotels (94% of rooms) being open at December 31, 2020.
ASPAC net rooms increased 11.4% compared to the fourth quarter of 2019.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising Segment
EAME/SW Asia management and franchising segment Adjusted EBITDA decreased 121.8% (122.4% in constant currency) to $(3) million, including $4 million of bad debt expense. At December 31, 2020, 84% of EAME/SW Asia full and select service hotels (85% of rooms) were open. This reflects a slight decrease in the number of hotels open compared to September 30, 2020, as a result of new travel restrictions in Europe.
EAME/SW Asia net rooms increased 4.5% compared to the fourth quarter of 2019.
Owned and Leased Hotels Segment
Total owned and leased hotels segment Adjusted EBITDA decreased 148.5% (148.6% in constant currency) to $(48) million. Owned and leased hotels segment results were heavily impacted by decreased demand due to the COVID-19 pandemic, and by dispositions in 2019. Refer to the table on page 11 of the schedules for a detailed list of portfolio changes and the year-over-year net impact to total owned and leased hotels segment Adjusted EBITDA.
At December 31, 2020, 82% of Hyatt’s owned and leased hotels (81% of rooms) were open. This compares to 87% of owned and leased hotels (78% of rooms) at September 30, 2020.
Corporate and Other
Corporate and other Adjusted EBITDA decreased 57.1% (56.5% decrease in constant currency) to $(65) million, reflecting an incremental $23 million loss as compared to the fourth quarter of 2019. Adjusted EBITDA was negatively impacted by $45 million of costs incurred on behalf of managed and franchised properties to provide necessary system-wide services and programs that we do not intend to recover from hotel owners.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses decreased 5.9% inclusive of rabbi trust impact and stock-based compensation. Adjusted selling, general, and administrative expenses decreased 20.7% or $19 million, primarily due to significant decreases in expenses as a result of cost containment initiatives in 2020, primarily payroll and related costs, and integration-related costs incurred in 2019 associated with the acquisition of Two Roads Hospitality LLC (“Two Roads”), partially offset by an increase in bad debt expense. Refer to the table on page 18 of the schedules for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
OPENINGS AND FUTURE EXPANSION
Twenty-three new hotels (or 6,877 rooms) joined Hyatt’s system in the fourth quarter of 2020, contributing to a 5.2% increase in net rooms compared to the fourth quarter of 2019. In 2020, the Company opened a total of 72 new hotels (or 14,972 rooms) including 11 operating properties (or 2,837 rooms) that converted to a Hyatt brand.
As of December 31, 2020, the Company had a pipeline of executed management or franchise contracts for approximately 500 hotels (approximately 101,000 rooms). The pipeline was unchanged compared to December 31, 2019.
The Company intends to successfully execute plans to sell approximately $1.5 billion of real estate by March 2022 as part of its capital strategy announced in March of 2019, and as of December 31, 2020, the Company has realized proceeds of nearly $1.0 billion towards that goal from the disposition of owned assets. In December 2020, the Company sold the shares of the entities which own the 159-room Hyatt Regency Baku in Azerbaijan for approximately $11 million to an unrelated third party and entered into a long-term management agreement for the property upon sale.
BALANCE SHEET / OTHER ITEMS
As of December 31, 2020, the Company reported the following:
- Total debt of $3,244 million.
- Pro rata share of unconsolidated hospitality venture debt of $671 million, substantially all of which is non-recourse to Hyatt and a portion of which Hyatt guarantees pursuant to separate agreements.
- Cash and cash equivalents, including investments in highly-rated money market funds and similar investments, of $1,207 million, short-term investments of $675 million and restricted cash of $11 million.
- Undrawn borrowing availability of $1,499 million under Hyatt’s revolving credit facility, net of letters of credit outstanding.
The Company believes it has adequate existing liquidity to fund operations and investments supporting the continued growth of the business for approximately 36 months based on fourth quarter of 2020 demand levels.
There were no Class A or Class B shares repurchased during the fourth quarter of 2020. The Company ended the fourth quarter with 39,250,241 Class A and 62,038,918 Class B shares issued and outstanding.
During the 2020 fiscal year, the Company repurchased $69 million shares of Class A common stock, consisting of 827,643 shares, and paid a $0.20 per share common dividend in the first quarter of 2020. Effective March 3, 2020, the Company suspended all share repurchase activity, and the Company has suspended its quarterly dividend.
Given the uncertain pace and timing of recovery from the impacts of the COVID-19 pandemic, the Company is providing limited guidance for the 2021 fiscal year:
- Adjusted selling, general, and administrative expenses are expected to be approximately $240 million. Refer to the table on page 19 of the schedules for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
- Capital expenditures are expected to be approximately $110 million.
- The Company expects to grow units, on a net rooms basis, by approximately 5.0%.
No disposition or acquisition activity beyond what has been completed as of the date of this release has been included in the 2021 Outlook. The Company’s 2021 Outlook is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that Hyatt will achieve these results.
Here’s their SEC filing
If you look at the Hyatt as a whole, its size is from one-fifth to one-seventh to Hilton, IHG, Marriott, and one-fourth of Accor (all in the number of hotels).
They have a higher percentage (roughly 50%) of full-service hotels than competitors that hurt the company in the current environment where select service performs the best.
They have a pipeline of 500 or so hotels. If they want to get into a bigger league, they really need to acquire a competitor and grow their existing brands fast.
If you think from the loyalty perspective, it could be your primary program if you mainly travel only in the United States or perhaps in China. The global footprint just isn’t there.