Hyatt Reports Fourth Quarter 2010 Results

Hyatt Hotels Corporation (NYSE: H) today reported financial results for the fourth quarter 2010 as follows:

“In the fourth quarter, we saw solid growth in demand and RevPAR, especially in our international and select-service properties. Continued focus on flow through led to significant operating margin improvement at our owned hotels.”

FOURTH QUARTER 2010

• Adjusted EBITDA was $118 million compared to $104 million in the fourth quarter of 2009, an increase of 13.5%.


• Net income attributable to Hyatt was $6 million, or $0.03 per share, compared to net loss attributable to Hyatt of $12 million, or $0.07 per share, in the fourth quarter of 2009. Adjusted for special items, net income attributable to Hyatt was $12 million, or $0.07 per share, during the fourth quarter of 2010 compared to net income attributable to Hyatt of $1 million, which resulted in a negligible per-share impact, during the fourth quarter of 2009. See the table on page 3 of the accompanying schedules for a summary of special items.


• Comparable owned and leased hotels RevPAR increased 4.1% (4.4% excluding the effect of currency) compared to the fourth quarter of 2009.


• Owned and leased hotel operating margins increased 170 basis points compared to the fourth quarter of 2009. Comparable owned and leased hotel operating margins increased 210 basis points compared to the same period in 2009. See the table on page 9 of the accompanying schedules for a reconciliation of comparable owned and leased hotel operating margins to owned and leased hotel operating margins.


• Comparable North American full-service RevPAR increased 3.9% (3.8% excluding the effect of currency) compared to the fourth quarter of 2009. Comparable North American select-service RevPAR increased 9.5% compared to the fourth quarter of 2009.


• Comparable International RevPAR increased 11.7% (9.2% excluding the effect of currency) compared to the fourth quarter of 2009.


• The Company opened six properties during the fourth quarter of 2010.

Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “In the fourth quarter, we saw solid growth in demand and RevPAR, especially in our international and select-service properties. Continued focus on flow through led to significant operating margin improvement at our owned hotels.”

“In 2010 we achieved improvements in key drivers of brand value -- namely associate engagement, customer satisfaction, and our Gold Passport program, which demonstrates our loyalty to our best customers. We also expanded our ability to serve more of our guests when they travel as we opened over 30 hotels across all brands and expanded the number of executed contracts for future hotels. Looking ahead, we continue to focus on our key strategies and goals, reinvest in our hotels, and pursue many opportunities for expansion with existing and new owners. We are focused on creating value over the long-term and are excited about our prospects around the world.”

FOURTH QUARTER 2010 SEGMENT RESULTS & OTHER ITEMS

Owned and Leased Hotels Segment

Adjusted EBITDA increased 17.6% in the fourth quarter of 2010 compared to the same period in 2009.

RevPAR for comparable owned and leased hotels increased 4.1% (4.4% excluding the effect of currency) in the fourth quarter of 2010 compared to the same period in 2009. Occupancy improved 160 basis points, and ADR increased 1.6% (1.8% excluding the effect of currency).

Due to the renovations at five properties during the fourth quarter of 2010, RevPAR for comparable owned and leased hotels was estimated to have been negatively impacted by approximately 400 basis points. This estimate was based upon a RevPAR assumption for each respective market.

Revenues increased 0.4% (0.6% excluding the effect of currency) in the fourth quarter of 2010 compared to the same period in 2009. Comparable hotel revenues increased 4.1% (4.3% excluding the effect of currency) largely due to increased occupancy in the fourth quarter of 2010 compared to the same period in 2009.

Owned and leased expenses decreased 1.6% in the fourth quarter of 2010 compared to the same period in 2009. Excluding expenses related to benefit programs funded through Rabbi Trusts and non-comparable hotel expenses, expenses increased 1.4% in the fourth quarter of 2010 compared to the same period in 2009. See the table on page 9 of the accompanying schedules for a reconciliation of comparable owned and leased hotels expense to owned and leased hotels expense.

Four hotels were removed from the owned and leased portfolio as follows:

• Sold three Chicago-area properties (Hyatt Lisle, Hyatt Deerfield, and Hyatt Rosemont) for $51 million and entered into a franchise agreement for each property.


• Sold Grand Hyatt Tampa Bay for $59 million. The Company continues to manage the property.

North American Management and Franchising Segment

Adjusted EBITDA increased by 33.3% in the fourth quarter of 2010 compared to the same period in 2009.

RevPAR for comparable North American full-service hotels increased 3.9% (3.8% excluding the effect of currency) in the fourth quarter of 2010 compared to the same period in 2009. Occupancy increased 80 basis points and ADR increased 2.6% (2.5% excluding the effect of currency).

RevPAR for comparable North American select-service hotels increased 9.5% in the fourth quarter of 2010 compared to the same period in 2009. Occupancy increased 590 basis points and ADR increased by 0.3%.

Revenue from management, franchise, and other fees increased 4.3% in the fourth quarter of 2010 compared to the same period in 2009.

The following properties were added to the portfolio during the fourth quarter of 2010:

• Hyatt Place Des Moines/Downtown (franchised, 95 rooms)


• Hyatt Place Pittsburgh-North Shore (franchised, 178 rooms)


• Hyatt Place Houston/Sugar Land (managed, 214 rooms)


• Hyatt Escala Lodge at Park City (managed, 153 rooms)

International Management and Franchising Segment

Adjusted EBITDA increased by 3.8% in the fourth quarter of 2010 compared to the same period in 2009 as a result of increased fee revenue.

RevPAR for comparable international hotels increased 11.7% (9.2% excluding the effect of currency) in the fourth quarter of 2010 compared to the same period in 2009. Occupancy increased 300 basis points and ADR increased 7.0% (4.6% excluding the effect of currency).

Revenue from management, franchise and other fees increased 9.8% in the fourth quarter of 2010 compared to the same period in 2009.

The following properties were added to the portfolio during the fourth quarter of 2010:

• Hyatt Regency Dusseldorf, Germany (managed, 303 rooms)


• Hyatt Regency Pune, India (managed, 219 rooms)

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased by 11.0% in the fourth quarter of 2010 compared to the same period in 2009. Adjusted selling, general, and administrative expenses increased by 10.3% in the fourth quarter of 2010 compared to the same period in 2009 due to higher incentive compensation and higher staffing levels. See the table on page 8 of the accompanying schedules for a reconciliation of adjusted selling, general, and administrative expenses to selling, general and administrative expenses.

OPENINGS AND FUTURE EXPANSION

Hyatt opened six properties in the fourth quarter of 2010. During the full-year 2010, the Company opened 31 properties.

The Company expects to open a significant number of new properties in the future. As of December 31, 2010, this effort was underscored by executed management or franchise contracts for approximately 140 hotels (or more than 32,000 rooms) across all brands. The executed contracts represent potential entry into several new countries and expansion into many new markets in which the Company is under-represented. Approximately 70% of the projected new hotels are located outside North America.

CAPITAL EXPENDITURES

Capital expenditures during the fourth quarter of 2010 totaled $160 million, including $68 million for investment in new properties, including land held for future development.

Full-year 2010 capital expenditures totaled $310 million, including $107 million for investment in new properties, including land held for future development.

CORPORATE FINANCE

During the fourth quarter of 2010, the Company:

• Sold four properties, as noted above (Hyatt Lisle, Hyatt Deerfield, Hyatt Rosemont and Grand Hyatt Tampa Bay) for $110 million.

On December 31, 2010, the Company had total debt of $771 million, cash and cash equivalents including investments in highly-rated money market funds and similar investments of approximately $1.1 billion, short-term investments of $524 million and undrawn borrowing availability of approximately $1.1 billion under its revolving credit facility.

2011 INFORMATION

The Company is providing the following information for the 2011 fiscal year:

• Capital expenditures are expected to be in the range of $380 to $400 million, inclusive of significant renovation projects at five owned properties. The Company expects that displacement due to renovations will negatively impact the owned and leased segment through the third quarter of 2011.


• Depreciation and amortization expense is expected to be in the range of $280 to $290 million.


• Interest expense is expected to be approximately $50 million.

 

Reader Comments:

Be the first to leave a comment for this article