Hyatt Hotels (H) down 6.2% since last earnings report: can it bounce back?

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A months have passed since the last Hyatt (H) hotel revenue report. Stocks lost around 6.2% during that time, underperforming the S&P 500.

Will the recent negative trend continue until its next results release, or should Hyatt hotels see a breakthrough? Before we dive into how investors and analysts have reacted in recent times, let’s take a look at the latest earnings report to better understand the important catalysts.

Hyatt’s best earnings estimate for third quarter, revenue missing

Hyatt reported mixed results in the third quarter of 2021, with earnings exceeding Zacks’ consensus estimate and revenue missing the same. However, the top and bottom results increased year over year. The company reported improved revenue per available room (RevPAR) due to higher demand in the United States and a strong recovery in Europe. Also, he noted an acceleration in terms of resumption of business and group travel.

Third Quarter Profits and Revenue

In the quarter under review, Hyatt’s adjusted earnings per share of $ 2.31 exceeded Zacks’ consensus estimate by a loss of 39 cents. In the quarter of the previous year, the company reported an adjusted loss of $ 1.48 per share.

Quarterly revenue of $ 851 million missed the consensus mark of $ 860 million by 1.1%. However, revenue jumped 113.3% year-on-year.

Highlights of operations

During the quarter, Adjusted EBITDA was $ 110 million compared to $ (48) million reported in the prior year quarter. Adjusted EBITDA margin increased to 27.4% in the third quarter from a 35% decline in the previous year quarter.

Segment details

Hyatt manages its business through four segments to present: owned and leased hotels; Management and Franchise of the Americas; Management and franchise in Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC); and Europe, Africa, Middle East and South West Asia (EAME / SW Asia) Management and Franchise.

In the third quarter, Owned and Leased Hotels segment revenues totaled $ 263 million, compared to $ 80 million for the prior year quarter. The increase was primarily driven by strong demand for leisure travel in the United States, coupled with easing travel restrictions in Europe. However, the RevPAR of owned and leased hotels is down 35.5% from 2019 levels. During the quarter, the Average Daily Rate (ADR) increased by 32.6% and the occupancy rate increased by 32.6%. ‘improved by 41.3 percentage points from 2020 levels.

Segment Adjusted EBITDA was $ 51 million in the third quarter compared to $ (56) million in the prior year quarter.

In the quarter, total management and franchise revenues were $ 96 million, compared to $ 40 million for the quarter a year earlier. That said, the metric has improved sequentially from the $ 77 million reported in the second quarter of 2021.

In the Americas Management and Franchise, RevPAR of comparable full-service hotels in America (in the third quarter) jumped 303.1% from the level in the previous year quarter. While ADR rose 35.1 percent, occupancy rates rose 35.8 percentage points from the number in the previous year’s quarter.

The RevPAR of comparable selected service hotels in the Americas increased 102.4% year-over-year. ADR increased 29.3% and occupancy rates improved 24.8 percentage points from the previous year quarter.

Adjusted EBITDA in the second quarter was $ 74 million, compared to $ 16 million in the previous year quarter.

For ASPAC management and franchise, the RevPAR of comparable full-service ASPAC hotels (in the third quarter) increased 5.7% compared to the figure for the previous year quarter. ADR increased 11.2% year-on-year. However, occupancy rates fell 2.1 percentage points from the number in the previous year’s quarter.

At the same time, the RevPAR of comparable ASPAC selected service hotels fell 4.1% year-over-year. ADR increased 7.3% year-on-year. However, occupancy rates fell 5.9 percentage points from the number in the previous year’s quarter.

Adjusted EBITDA for the second quarter was $ 6 million, compared to $ 9 million for the previous year quarter.

For the EAME / SW Asia management and franchise, the RevPAR of comparable full-service hotels EAME / SW Asia jumped 162.6% from last year’s quarter level. ADR rose 3% and occupancy rates improved 28.6 percentage points from the previous year quarter.

Adjusted EBITDA for the second quarter was $ 5 million compared to $ (2) million for the quarter of the previous year.

Balance sheet

As of September 30, 2021, Hyatt was reporting cash and cash equivalents (including investments in money market funds and similar investments) of $ 2,418 million, compared to $ 1,144 million in the previous quarter. Total debt as of September 30, 2021 was $ 2,988 million compared to $ 3.246 million as of June 30, 2021.

Meanwhile, the company has declared an unused loan availability of $ 1,500 million under Hyatt’s revolving credit facility.

Other business updates

On November 1, 2021, the company said it had completed the acquisition of Apple Leisure Group. In addition, he noted the advancement of the investment strategy with a new commitment of $ 2 billion for additional asset sales by the end of 2024. Considering the divestiture commitment associated with the Acquisition of the asset lighting platform from Apple Leisure Group, the company plans to transform its earnings to around 80% on a fee basis by 2024.

Regarding hotel openings, 20 new hotels (or 4,599 rooms) joined the Hyatt system in the third quarter of 2021. This contributed to a 6.9% increase in the net number of rooms compared to the previous year. third quarter 2020. As of September 30, 2021, the company had executed management or franchise contracts for approximately 505 hotels (or 103,000 rooms) against 495 hotels (or 101,000 rooms) as of June 30, 2021.

About 99% of the total number of system-wide hotels were open as of September 30, 2021, compared to 98% as of June 30, 2021.

Outlook 2021

For 2021, the company forecasts adjusted selling, general and administrative expenses between $ 240 million and $ 250 million. Capital expenditures are projected to be approximately $ 110 million. Meanwhile, unit growth in 2021 is expected to be above 6% on a net room basis.

How have the estimates evolved since then?

As it turns out, new estimates have trended upward over the past month. The consensus estimate has changed by 57.06% due to these changes.

VGM scores

Currently Hyatt Hotels has a good growth score of B, but its Momentum score is doing a bit better with an A. However, the stock received a D rating on the value side, which puts it in the 40% lower for this investment. strategy.

Overall, the stock has an overall VGM score of B. If you’re not strategy-focused, this score is the one you should be interested in.

Outlook

Estimates are 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 the stock to come back online in the coming months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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