CHICAGO—Hyatt Hotels Corporation will be an active player on both sides of the transaction table during 2012, executives said Thursday during the company’s fourth-quarter earnings call.
“Our core philosophy and our thinking about cap allocation is really driven by recycling,” said Mark Hoplamazian, the company’s president and CEO.
The company has enough cash on hand to pull the trigger on large-scale transactions but also is aiming to dispose of certain assets to generate more capital with which to fund future deals.
“We’ve been active in looking at a number of opportunities constantly. It’s a regular part of what we’re doing,” Hoplamazian said of the hotel hunt.
Targets include assets in key gateway cities in which Hyatt lacks representation, he said. Also on the company’s radar: small hotel collections and full-scale brand acquisitions.
Hyatt spent more than US$1 billion on renovations and acquisitions during 2011—activity that was highlighted by the group’s addition of the US$661-million purchase of 20-hotels from LodgeWorks LP.
Responding to a question during the call, Hoplamazian said the deal was not contributing to a slowdown on select-service performance.
“LodgeWorks has not had a negative impact in any way,” he said. “We’ve seen a significant increase in market share across the hotels. … Revenue into those hotels (from Hyatt’s Gold Passport loyalty program) has been significant. … LodgeWorks is clicking along very well and very much in accordance with what we had expected.”
The company plans to spend between US$15 million and US$20 million to rebrand a portion of the LodgeWorks portfolio as Hyatt House extended-stay hotels. Total capital expenditures are expected to be in the range of US$350 million for 2012, CFO Harmit J. Singh said.
2012 likely will see an increased focus on opportunities outside North America, Hoplamazian said.
As of 31 December 2011, the company had executed management or franchise contracts for more than 170 hotels (or more than 38,000 rooms) across all brands, driven by a 40% increase in executed contracts within the past two years, he said.
Approximately 70% of the projected new hotels will be located outside North America.
“We’ve benefited from great support from third-party developers and owners around the world, augmenting our own acquisitions,” Hoplamazian said.
Hyatt had 460 hotels comprising 130,534 rooms in its global portfolio as of yearend.
Group and corporate sales
Hyatt’s expansion in key markets such as New York and Shanghai contributed to an increase in inclusion in corporate travel programs, Hoplamazian said.
The company saw a 35% rise in corporate accounts for the year, he said.
Group performance is also on the rise, although booking windows remained compressed, Singh said.
“We’ve booked a lot of group biz for 2012 and beyond, with year-over-year production up each month during the quarter,” he said.
As of yearend, group bookings for 2012 were up 8% over 2010. Nearly three-fourths of expected group business for 2012 was already contracted at rates 4% higher than at the same point during 2010.
The pace for 2013 and 2014 also is positive, Singh said.
“We have about 40% for ’13 booked and about 25% of the biz for ’14 booked at rates that are higher than 2012,” he said.