CHICAGO—Hyatt Hotels Corporation might have stumbled during the fourth quarter, but the company’s goal to expand its brand presence globally is still on track for 2013, according to the company’s president and CEO Mark Hoplamazian.
Hoplamaziansaid during the company’s fourth quarter earnings call that improving results from existing hotels and expanding the company’s footprint are Hyatt’s two primary goals.
“In terms of adding hotels, we’re not pursing growth for growth’s sake,” he said. “ … We believe that owning hotels supports our goal of creating preference for Hyatt and our guests.”
Hyatt Hotels Corporation
Hyatt’s revenue-per-available-room growth for owned and leased hotels in the U.S. increased by between 6% and 9% over the quarter because of “healthy transient demand and benefits from renovations,” Hoplamazian said.
However, the company faced headwinds in countries outside of the U.S. with RevPAR growth muted and varied. The Europe, Middle East and Africa region and the Asia/Pacific region saw RevPAR increase slightly by 1% and 3%, respectively, with non-recurring events negatively impacting RevPAR growth for the quarter.
“Looking ahead, 2013 will be a year of stable growth,” he said, even if the first half of the year will be “somewhat choppy.”
For full-year 2012, Hyatt added 22 hotels to its portfolio—an increase of 3%. Of those 22 hotels, 13 were opened in new markets. The company has 475 hotels in its portfolio.
The company also acquired two properties: a 734-room hotel in Mexico City that was rebranded to the Hyatt Regency Mexico City and the 319-room Hyatt Regency Birmingham in the United Kingdom. The combined purchase price was approximately $235 million.
“We feel good about these investments,” he said. “Each is on track thus far and creating significant brand value and enterprise value.”
The Hyatt Regency Birmingham, acquired in November 2012, “is an interesting story,” Hoplamazian said because the hotel is securing the company’s future in an enticing market.
Hyatt acquired the hotel off market, and the purchase price of $43 million was attractive, Hoplamazian said, adding Hyatt only has three properties in England.
“Birmingham is the second most important market behind London in the U.K.,” he said. “We really wanted to control our presence in the market. We bought it at an attractive price and expect a good return on it.”
As an added benefit, the market also has a lot of group activity, he said.
To expand its global presence, Hyatt also is involved in conversion deals in France and India, with plans to convert nine hotels total under long-term management contracts by 2013.
Group pace for full-service hotels in the U.S. was up 4%, with half coming from rate and half coming from occupancy, Hoplamazian said.
After “a truly terrible” November on the group said, Hoplamazian said Hyatt had the best December in group business since 2007, and January is up 7% in bookings.
The booking window is also lengthening, with the curve moving out a bit, he said.
“The fact is when we look at group room revenue, the strength tends to be in smaller room blocks and smaller meeting size,” he said. “The largest meetings are lagging, but still positive.”
“We still see significant booking activity for the near term,” he added.