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Hyatt Record Total Fee Revenue Led to the Highest Cash Flow from Operations in Company History

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Hyatt Record Total Fee Revenue Led to the Highest Cash Flow from Operations in Company History

Hyatt Reports Fourth Quarter and Full Year 2023 Results

Hyatt Hotels Corporation (NYSE: H) today reported fourth quarter and full year 2023 financial results. Highlights include:

1 Represents the sum of Net Deferrals and Net Financed Contracts.

Mark S. Hoplamazian, President and Chief Executive Officer of Hyatt, said, “The fourth quarter marks the completion of a transformative year and demonstrates the progress towards our strategic vision and earnings evolution. RevPAR growth exceeded the high end of our guidance range and we had industry leading net rooms growth for the seventh consecutive year. This led to a record level of fees and the highest free cash flow in Hyatt’s history. We returned $500 million to our shareholders and achieved an asset-light earnings mix of approximately 76% for the full year, a testament to the successful execution of our strategy.”

Operational Update

A record level of management, franchise, license, and other fees of $256 million were generated in the fourth quarter of 2023 driven by continued strong global demand for travel and net rooms growth.

Comparable system-wide RevPAR increased 9.1% in the fourth quarter and increased 17.0% for the full year of 2023, compared to the same periods in 2022, driven by the rapid recovery in Greater China and strengthening group demand in the United States. Group booking pace for Americas full service managed properties is currently up 8% for full year 2024 compared to 2023.

Comparable Net Package RevPAR for ALG properties increased 9.2% in the fourth quarter and 13.6% for the full year of 2023, compared to the same periods in 2022. The fourth quarter benefited from improved results in Cancun, with Comparable Net Package RevPAR up approximately 10% compared to the same period in 2022. In the first quarter of 2024, booking pace for ALG all-inclusive properties in the Americas is up 11% for the first quarter of 2024.

Segment Results and Highlights

(in millions)

Three Months Ended
December 31,

 

 

 

Year Ended
December 31,

 

 

 

 

2023

 

 

 

2022

 

 

Change (%)

 

 

2023

 

 

 

2022

 

 

Change (%)

Owned and leased hotels

$

90

 

 

$

88

 

 

3.0

%

 

$

312

 

 

$

307

 

 

1.7

%

Americas management and franchising

 

114

 

 

 

106

 

 

7.6

%

 

 

469

 

 

 

422

 

 

11.2

%

ASPAC management and franchising (a)

 

36

 

 

 

20

 

 

76.9

%

 

 

126

 

 

 

54

 

 

131.9

%

EAME management and franchising (a)

 

17

 

 

 

15

 

 

19.7

%

 

 

61

 

 

 

47

 

 

30.4

%

Apple Leisure Group

 

21

 

 

 

43

 

 

(52.8

)%

 

 

199

 

 

 

231

 

 

(14.0

)%

Corporate and other

 

(37

)

 

 

(40

)

 

6.6

%

 

 

(139

)

 

 

(154

)

 

9.9

%

Eliminations

 

 

 

 

 

 

772.6

%

 

 

1

 

 

 

1

 

 

33.1

%

Adjusted EBITDA

$

241

 

 

$

232

 

 

4.0

%

 

$

1,029

 

 

$

908

 

 

13.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

 

Year Ended
December 31,

 

 

 

 

2023

 

 

 

2022

 

 

Change (%)

 

 

2023

 

 

 

2022

 

 

Change (%)

Net Deferrals

$

18

 

 

$

28

 

 

(37.2

)%

 

$

91

 

 

$

94

 

 

(3.4

)%

Net Financed Contracts

$

15

 

 

$

15

 

 

1.7

%

 

$

67

 

 

$

63

 

 

6.9

%

 

(a) Effective January 1, 2023, the Company has changed the strategic and operational oversight for our properties located in the Indian subcontinent. Revenues associated with these properties are now reported in the ASPAC management and franchising segment. The segment changes have been reflected retrospectively for the three months and year ended December 31, 2022.

Openings and Development

In the fourth quarter, 29 new hotels (or 9,648 rooms) joined Hyatt’s portfolio, inclusive of six hotels in Greater China that converted to a Hyatt brand through a strategic relationship with an affiliate of Mumian Hotels. Notable openings included the 2,500 room Rio Hotel & Casino in Las Vegas, Nevada, and the 1,100 room Sunscape Coco Punta Cana and 900 room Sunscape Dominicus La Romana in the Dominican Republic. Hotel Toranomon Hills, part of The Unbound Collection by Hyatt, in Japan, and Ronil Goa, a JdV by Hyatt hotel, in India, also opened during the quarter.

For the full year of 2023, 101 new hotels (or 23,965 rooms) joined Hyatt’s portfolio, inclusive of 43 hotels (or 13,223 rooms) which converted to a Hyatt brand.

As of December 31, 2023, the Company had a pipeline of executed management or franchise contracts for approximately 650 hotels (approximately 127,000 rooms), inclusive of 17 Hyatt Studios hotels (approximately 2,000 rooms). During the fourth quarter, the first Hyatt Studios hotel broke ground in Mobile, Alabama.

Transactions and Capital Strategy

On February 14, 2024, the Company completed a transaction that resulted in the restructuring of the entity that owns our Unlimited Vacation Club (“UVC”) business by selling 80% of the entity to an investor unaffiliated with Hyatt for $80 million. Hyatt will continue to manage the Unlimited Vacation Club business under a long-term management agreement and license and royalty agreement, ensuring a seamless transition for colleagues, UVC members and hotel owners. As a result of the transaction, the Company will receive management fees and royalty fees in relation to the exclusive arrangement between the Hyatt Inclusive Collection brands and UVC, and the Company will no longer report Net Deferrals and Net Financed Contracts.

On February 9, 2024, the Company sold Hyatt Regency Aruba Resort Spa and Casino for approximately $240 million to an unrelated third party and entered into a long-term management agreement. As part of the transaction, the Company provided approximately $41 million of seller financing.

The Company is providing updates on the progress for five asset sales. The Company has signed definitive purchase and sale agreements for two assets that aggregate to approximately $310 million of expected gross proceeds. Further, the Company is marketing one additional asset for sale and is engaged in off-market discussions for two other assets.

The Company remains committed to successfully executing plans to realize $2.0 billion of gross proceeds from the sale of real estate, net of acquisitions, by the end of 2024 as part of its expanded asset-disposition commitment announced in August 2021. As of February 23, 2024, the Company has realized $961 million of gross proceeds from the net disposition of real estate, inclusive of Hyatt Regency Aruba Resort Spa and Casino.

Balance Sheet and Liquidity

As of December 31, 2023, the Company reported the following:

The Company repurchased a total of 889,902 Class A common shares for approximately $95 million in the fourth quarter and repurchased a total of 4,123,828 Class A common shares for approximately $453 million during the full year of 2023. The Company ended the fourth quarter with 44,275,818 Class A and 58,757,123 Class B shares issued and outstanding. During the full year of 2023, the Company returned $500 million to shareholders, inclusive of dividends and share repurchases.

From January 1 through February 15, 2024, the Company repurchased 227,958 Class A common shares for approximately $30 million. As of February 15, 2024, the Company has approximately $1.1 billion remaining under its share repurchase authorization.

Segment Realignment

During the quarter ending March 31, 2024, the Company has realigned its financial reporting segments to align with Hyatt’s business strategy, the organizational changes for certain members of Hyatt’s leadership team, and the manner in which the Company’s President and Chief Executive Officer, who is also its chief operating decision maker, assesses performance of the business and makes decisions regarding allocation of resources. As a result of the realignment, a summary of Hyatt’s reportable segments is as follows:

2024 Outlook

The Company is providing the following outlook for the 2024 fiscal year. Please refer to the table on schedule A-22 which bridges 2023 full year reported actual results to illustrative 2023 results that adjust for the sale of Hyatt Regency Aruba Resort Spa and Casino, the Unlimited Vacation Club transaction, and the reporting of Mr & Mrs Smith commissions and SG&A in the Distribution segment within distribution revenues and distribution expenses, in connection with the segment realignment.

 

 

Full Year 2024 vs. 2023

System-Wide RevPAR1

 

3% to 5%

Net Rooms Growth

 

5.5% to 6%

(in millions)

 

Full Year 2024

Net Income

 

Approx. $560

Management, Franchise, License, and Other Fees

 

$1,100 – $1,130

Adjusted SG&A2, 3

 

$425 – $435

Adjusted EBITDA2

 

$1,175 – $1,225

Net Deferrals + Net Financed Contracts

 

N/A – Refer to Transactions and Capital Strategy
section of the Earnings Release

Capital Expenditures

 

Approx. $170

Free Cash Flow2

 

$625 – $675

Capital Returns to Shareholders4

 

$550 – $600

1 RevPAR is based on constant currency whereby previous periods are translated based on the current period exchange rate. RevPAR percentage for 2024 vs. 2023 is based on comparable hotels.

2 Refer to the tables beginning with schedule A-15 for a reconciliation of estimated net income attributable to Hyatt Hotels Corporation to EBITDA and EBITDA to Adjusted EBITDA, selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses, and net cash provided by operating activities to Free Cash Flow.

3 Adjusted SG&A outlook excludes integration related expenses.

4 The Company expects to return capital to shareholders through a combination of cash dividends on its common stock and share repurchases.

No disposition or acquisition activity beyond what has been completed as of the date of this release has been included in the 2024 Outlook. The Company’s 2024 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.

Posted by on February 23, 2024.

Categories: Financial

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