-
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:
- Net income was $26 million in the fourth quarter and $220 million for the full year of 2023, and exceeded the full year outlook for 2023. Adjusted net income was $68 million in the fourth quarter and $276 million for the full year of 2023.
- Diluted EPS was $0.25 in the fourth quarter and $2.05 for the full year of 2023. Adjusted Diluted EPS was $0.64 in the fourth quarter and $2.56 for the full year of 2023.
- Adjusted EBITDA was $241 million in the fourth quarter and $1,029 million for the full year of 2023, and exceeded the full year outlook range for 2023.
- Adjusted EBITDA does not include Net Deferrals and Net Financed Contracts of $33 million1 in the fourth quarter or Net Deferrals and Net Financed Contracts of $158 million1 for the full year of 2023.
- Comparable system-wide RevPAR increased 9.1% in the fourth quarter and 17.0% for the full year of 2023, compared to the same periods in 2022, and exceeded the full year outlook for 2023.
- Comparable owned and leased hotels RevPAR increased 5.9% in the fourth quarter and 15.5% for the full year of 2023, compared to the same periods in 2022. Comparable owned and leased hotels operating margin was 26.2% in the fourth quarter and 25.4% for the full year of 2023.
- Comparable Net Package RevPAR increased 11.3% in the fourth quarter and 15.3% for the full year of 2023 compared to the same periods in 2022.
- Net Rooms Growth was 5.9% for the full year of 2023, in line with the full year outlook for 2023.
- Pipeline of executed management or franchise contracts was approximately 127,000 rooms.
- Share Repurchases were approximately 890 thousand Class A shares for $95 million in the fourth quarter and approximately 4.1 million Class A shares for $453 million for the full year of 2023.
- Capital Returns to Shareholders were $500 million for the full year of 2023, inclusive of dividends and share repurchases, in line with the full year outlook for 2023.
| 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. | |||||||||||||||||||||
- Owned and leased hotels segment: Results in the fourth quarter were driven by the recovery of group demand and increased rate growth across group and transient customers which contributed to strong RevPAR growth over the fourth quarter of 2022. Comparable owned and leased hotels operating margin expanded 240 basis points compared to the fourth quarter of 2019 and 310 basis points compared to the full year of 2019.
- Americas management and franchising segment: Results in the fourth quarter were driven by improved group and business transient results along with resilient leisure demand. Total fees in the quarter increased 6% compared to the fourth quarter of 2022, with RevPAR in the United States up 3% in the fourth quarter compared to the same period in 2022, driven by strong group rate.
- ASPAC management and franchising segment: Results in the fourth quarter were driven by strength in all customer segments which contributed to RevPAR growth across the sub regions, with Greater China improving 84% compared to the fourth quarter of 2022.
- EAME management and franchising segment: Results in the fourth quarter were driven by resilient leisure demand and strong business transient and group performance, despite the impact of the 2022 World Cup in Qatar. The region benefited from increased airlift from the United States, Middle East, and China.
- Apple Leisure Group segment: Results in the fourth quarter benefited from improved results in Cancun. ALG segment Adjusted EBITDA for the quarter increased 33% when adjusted for the $23 million non-cash benefit in the fourth quarter of 2022, that did not repeat in 2023, and the unfavorable impact of foreign currency exchange rates from the strengthening Mexican Peso.
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:
- Total debt of $3,056 million.
- Pro rata share of unconsolidated hospitality venture debt of $548 million, substantially all of which is non-recourse to Hyatt and a portion of which Hyatt guarantees pursuant to separate agreements.
- Total liquidity of approximately $2.4 billion with $896 million of cash and cash equivalents and short-term investments, and borrowing availability of $1,496 million under Hyatt's revolving credit facility, net of letters of credit outstanding.
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:
- Management and franchising, which consists of the provision of management, franchising, and hotel services, or the licensing of our intellectual property to, (i) our property portfolio, (ii) our co-branded credit card programs, and (iii) other hospitality-related businesses, including the Unlimited Vacation Club;
- Owned and leased, which consists of our owned and leased hotel portfolio and, for purposes of owned and leased segment Adjusted EBITDA, our pro rata share of unconsolidated hospitality ventures' Adjusted EBITDA based on our ownership percentage of each venture; and
- Distribution, which consists of distribution and destination management services offered through ALG Vacations and the boutique and luxury global travel platform offered through Mr & Mrs Smith.
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. |