Despite $304M Q1 net loss, Hyatt remains optimistic for rest of ‘21
Hyatt Hotels Corporation, for the first quarter ended March 31, reported net loss of $304 million, or $2.99 per diluted share, compared to net loss of $103 million, or $1.02 per diluted share, in the first quarter of 2020. Adjusted net loss was $363 million, or $3.57 per diluted share, in the first quarter of 2021, compared to adjusted net loss of $35 million, or $0.35 per diluted share, in the first quarter of 2020.
“First quarter results exceeded expectations as demand improved meaningfully over the course of the quarter,” said Mark S. Hoplamazian, president/CEO, Hyatt Hotels Corporation. “The expansion of vaccine distribution and the easing of travel restrictions in certain markets fueled improved confidence in travel in many of the markets in which we operate. We also reported strong net rooms growth of 6.5%, reaching an important milestone with the opening of our 1,000th hotel in the quarter.”
He continued, “While risks do remain in the management of the pandemic, we are optimistic about continued growth of demand in the coming months and the balance of 2021. The demand levels we saw in March have continued through April. While leisure travel continues to lead the recovery, we are encouraged by positive indicators across other travel segments as well.”
First-quarter 2021 highlights:
- Adjusted EBITDA decreased 123.3% compared to the first quarter of 2020, to -$20 million.
- Comparable system-wide RevPAR decreased 48.9% compared to the first quarter of 2020, and decreased 65.4% compared to the first quarter 2019 on a reported basis.
- Comparable owned and leased hotels RevPAR decreased 64.4% compared to the first quarter of 2020, and decreased 72.5% compared to the first quarter 2019 on a reported basis.
- Net rooms growth of 6.5%.
- Pipeline of executed management or franchise contracts for approximately 100,000 rooms.
- As of March 31, the company had cash, cash equivalents and short-term investments of $1.6 billion.
Comparable system-wide RevPAR and comparable owned and leased hotel RevPAR improved in the first quarter of 2021 compared to the fourth quarter of 2020. The pace of recovery varied by region and was favorably impacted by the easing of travel restrictions in certain markets and strengthening demand for leisure-oriented destinations. Consistent with trends in each of the last two quarters, the recovery was led by relative strength in Greater China and U.S. select-service hotels. Additionally, certain resort hotels experienced a notable sequential improvement in demand.
Comparable system-wide RevPAR strengthened through the first quarter, increasing more than 50% from January to March, and reaching the highest level since the onset of the COVID-19 pandemic. Results were driven by strong leisure transient demand, particularly on weekends and holidays. Group and business transient demand also gained momentum through the quarter, but at a more modest pace.
As of March 31, 96% of total system-wide hotels (94% of rooms) were open.
Management, franchise and other fees
Total management and franchise fee revenues decreased 40.6% (40.7% decrease in constant currency) to $49 million, reflecting a sequential improvement from $47 million reported in the fourth quarter of 2020. Base management fees decreased 48.8% to $24 million, incentive management fees increased 2.2% to $8 million and franchise fees decreased 38.0% to $17 million during the quarter. Other fee revenues decreased 46.7% to $14 million.
Americas management and franchising segment
Americas management and franchising segment adjusted EBITDA decreased 59.3% (59.2% decrease in constant currency) to $28 million, reflecting a sequential improvement over the three months of the quarter and lapping the impact of the COVID-19 pandemic that began in March of 2020. At March 31, 2021, 93% of Hyatt’s Americas full-service hotels (92% of rooms) and 99% of Americas select-service hotels (99% of rooms) were open.
Americas net rooms increased 5.2% compared to the first quarter of 2020.
ASPAC management and franchising segment
ASPAC (Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia) management and franchising segment adjusted EBITDA decreased 39.7% (40.8% decrease in constant currency) to $5 million. Results across the region were led by Greater China. At March 31, 2021, 97% of Hyatt’s ASPAC full- and select-service hotels (96% of rooms) were open.
ASPAC net rooms increased 13.6% compared to the first quarter of 2020.
EAME/SW Asia management and franchising segment
EAME/SW Asia (Europe, Africa, Middle East and Southwest Asia) management and franchising segment adjusted EBITDA decreased 102.5% (103.8% decrease in constant currency), reflecting the impact of the COVID-19 pandemic and travel restrictions across parts of the region. At March 31, 89% of Hyatt’s EAME/SW Asia full- and select-service hotels (89% of rooms) were open.
EAME/SW Asia net rooms increased 3.3% compared to the first quarter of 2020.
Owned and leased hotels segment
Total owned and leased hotels segment adjusted EBITDA decreased 183.5% (184.7% decrease in constant currency) to -$29 million. Owned and leased hotels segment results were heavily impacted by the COVID-19 pandemic, but improved meaningfully over the three months of the quarter driven by stronger demand. At March 31, 85% of Hyatt’s owned and leased hotels (83% of rooms) were open.
Corporate and other
Corporate and other adjusted EBITDA increased 13.3% (13.7% increase in constant currency) to -$24 million, reflecting a $3 million improvement as compared to the first quarter of 2020. This increase was primarily due to cost containment initiatives that reduced expenses, predominantly payroll and related costs.
Hyatt is providing the following guidance for the 2021 fiscal year:
- Adjusted selling, general and administrative expenses are expected to be approximately $240 million.
- Capital expenditures are expected to be approximately $110 million.
- The company expects to grow units, on a net rooms basis, by more than 5%.