Hyatt Hotels Corporation on Thursday reported financial results as follows:
- Adjusted EBITDA was $125 million in the first quarter of 2012 compared to $109 million in the first quarter of 2011, an increase of 14.7%.
- Net income attributable to Hyatt was $10 million, or $0.06 per share, during the first quarter of 2012 compared to net income attributable to Hyatt of $10 million, or $0.06 per share, in the first quarter of 2011. Adjusted for special items, net income attributable to Hyatt was $5 million, or $0.03 per share, during the first quarter of 2012 compared to net income attributable to Hyatt of $11 million, or $0.07 per share, during the first quarter of 2011.
- Comparable owned and leased hotel RevPAR increased 8.3% (8.7% excluding the effect of currency) in the first quarter of 2012 compared to the first quarter of 2011.
- Owned and leased hotel operating margins increased 220 basis points in the first quarter of 2012 compared to the first quarter of 2011. Comparable owned and leased hotel operating margins increased 120 basis points in the first quarter of 2012 compared to the same period in 2011. See the table on page 8 of the accompanying schedules for a reconciliation of comparable owned and leased hotel operating margin to owned and leased hotel operating margin.
- Comparable North American full service hotel RevPAR increased 8.1% in the first quarter of 2012 compared to the first quarter of 2011. Comparable North American select service hotel RevPAR increased 7.2% in the first quarter of 2012 compared to the first quarter of 2011.
- Comparable international hotel RevPAR increased 5.7% (6.5% excluding the effect of currency) in the first quarter of 2012 compared to the first quarter of 2011.
- The Company added six properties during the first quarter of 2012.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “During the first quarter of 2012, we continued to deliver on our mission of providing authentic hospitality by making a difference in the lives of people that we touch every day, evidenced by improvements in market share as well as guest and meeting planner satisfaction. Our Adjusted EBITDA increased almost 15% as recently added and renovated hotels contributed to stronger results.
“We continue to expand in key markets that are significant to our future success. During the quarter, we opened six hotels, including Park Hyatt Hyderabad in India. We also converted two existing North American properties to our Andaz brand and, following an extensive renovation, re-opened the world-renowned Park Hyatt Sydney.
“Over the last year, we increased both development resources and financial capital dedicated to expanding our presence. Results of these investments are becoming more visible, as our base of executed agreements for future hotels has increased by 15% during that time period. Over the last few months, we announced management agreements for hotels in Cambodia, Switzerland, India, Russia, South Korea, Thailand, Saudi Arabia, and Puerto Rico. These expected future additions represent both conversions and to-be-built hotels across many of our brands, and demonstrate an executed contract base that is oriented toward high-value international full service hotels.
“We recently announced the acquisition of a 756-room hotel in the Polanco area of Mexico City for approximately $190 million. Upon closing, this 38-story property will be re-branded as Hyatt Regency Mexico City, establishing Hyatt’s presence in a prominent position in this gateway city and marking an important step in our growth strategy in Mexico and Latin America. We intend to invest approximately $40 million to renovate the property over the next three years and believe that our all-in investment is far below replacement cost for this high-quality well-located property in a top global market.
“We look forward to continued progress in 2012 given the dedication of our people, the ongoing cyclical recovery in lodging evidenced by strong occupancy levels, limited new supply growth in the U.S., and increasing preference for our brands among developers, hotel owners, and guests. In addition, we are excited about our recently announced organizational re-alignment intended to enhance our effectiveness and support our growth in this decade and beyond.”
SEGMENT RESULTS & OTHER ITEMS
Owned and Leased Hotels Segment
Adjusted EBITDA increased 24.0% in the first quarter of 2012 compared to the same period in 2011.
RevPAR for comparable owned and leased hotels increased 8.3% (8.7% excluding the effect of currency) in the first quarter of 2012 compared to the same period in 2011. Occupancy improved 420 basis points and ADR increased 1.9% (2.3% excluding the effect of currency) compared to the same period in 2011.
Revenues increased 9.5% in the first quarter of 2012 compared to the same period in 2011. Comparable hotel revenues increased 7.6% in the first quarter of 2012 compared to the same period in 2011.
Owned and leased hotel expenses increased 6.5% in the first quarter of 2012 compared to the same period in 2011. Excluding expenses related to benefit programs funded through Rabbi Trusts and non-comparable hotel expenses, expenses increased 6.0% in the first quarter of 2012 compared to the same period in 2011, primarily due to higher payroll and related expenses as a result of higher occupancy levels. See the table on page 8 of the accompanying schedules for a reconciliation of comparable owned and leased hotels expenses to owned and leased hotels expenses.
North American Management and Franchising Segment
Adjusted EBITDA increased 15.0% in the first quarter of 2012 compared to the same period in 2011.
RevPAR for comparable North American full service hotels increased 8.1% in the first quarter of 2012 compared to the same period in 2011. Occupancy increased 340 basis points and ADR increased 2.7% (2.8% excluding the effect of currency) compared to the same period in 2011.
Group rooms revenue at comparable North American full service hotels increased approximately 9% in the first quarter of 2012 compared to the same period in 2011, as a result of strong corporate demand offset by slightly lower association demand.
Transient rooms revenue at comparable North American full service hotels also increased approximately 9% in the first quarter of 2012 compared to the same period in 2011, driven by strength from corporate customers.
RevPAR for comparable North American select service hotels increased 7.2% in the first quarter of 2012 compared to the same period in 2011. Occupancy increased 240 basis points and ADR increased by 3.5% compared to the same period in 2011.
Revenue from management and franchise fees increased 21.6% in the first quarter of 2012 compared to the same period in 2011.
The following four hotels were added to the portfolio during the first quarter:
Hyatt North Houston (franchised, 335 rooms)
Hyatt Place Raleigh West (franchised, 132 rooms)
Hyatt Place San Jose / Downtown (franchised, 234 rooms)
Hyatt Place New Orleans / Convention Center (franchised, 170 rooms)
International Management and Franchising Segment
Adjusted EBITDA was flat in the first quarter of 2012 compared to the same period in 2011.
RevPAR for comparable international hotels increased 5.7% (6.5% excluding the effect of currency) in the first quarter of 2012 compared to the same period in 2011. Occupancy increased 130 basis points and ADR increased 3.6% (4.4% excluding the effect of currency) compared to the same period in 2011.
Revenue from management and franchise fees increased 5.4% in the first quarter of 2012 compared to the same period in 2011.
The following two hotels were added to the portfolio during the first quarter:
Park Hyatt Ningbo Resort and Spa (managed, 214 rooms)
Park Hyatt Hyderabad (managed, 209 rooms)
One hotel was removed from the portfolio in the first quarter of 2012.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased by 32.9% in the first quarter of 2012 compared to the same period in 2011. Adjusted selling, general, and administrative expenses increased by $17 million, or 25.8%, in the first quarter of 2012 compared to the same period in 2011. Approximately one-third of the $17 million increase relates to brand launch expenses, bad debts, and legal fees. See the table on page 7 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 added six hotels in the first quarter of 2012, each of which is listed above.
The Company expects to open a significant number of new properties in the future. As of March 31, 2012 this effort was underscored by executed management or franchise contracts for more than 170 hotels (or more than 38,000 rooms) across all brands. The executed contracts represent potential entry into several new countries and expansion into many new markets or markets in which the Company is under-represented. Approximately 70% of the future expansion is expected to be located outside North America.
CAPITAL EXPENDITURES
Capital expenditures during the first quarter of 2012 totaled $95 million, categorized as follows:
Maintenance: $23 million
Enhancements to existing properties: $52 million
Investment in new properties: $20 million
Expenditures related to investment in new properties primarily consist of land acquisition costs.
CORPORATE FINANCE
On March 31, 2012, the Company had total debt of approximately $1.2 billion.
On March 31, 2012, the Company had cash and cash equivalents, including investments in highly-rated money market funds and similar investments, of approximately $540 million and short-term investments of approximately $510 million.
On March 31, 2012, the Company had undrawn borrowing availability of approximately $1.4 billion under its revolving credit facility.
2012 INFORMATION
The Company is providing the following information for the 2012 fiscal year:
Capital expenditures are expected to be approximately $360 million. The increase in capital expenditures as compared to previously announced 2012 information relates to the recently announced construction of Hyatt Place Omaha Downtown/Old Market.
Depreciation and amortization expense is expected to be approximately $350 million.
Interest expense is expected to be between $70 and $75 million.
The Company expects to open over 20 hotels.
Read the full earnings report here.
