News

Hyatt Hotels Corporation H delivered tepid first-quarter 2024 results, wherein earnings and revenues missed the Zacks Consensus Estimate. Then again, the top and bottom lines increased on a year-over-year basis.

Hyatt’s results reflect year-over-year growth in comparable system-wide revenue per available room (RevPAR), driven by an increase in occupancy and average daily rate (ADR). This uptrend is mainly driven by solid demand across all customer segments. Travel demand by leisure guests, especially in Mexico and the Caribbean, along with business travel demand was encouraging. Moreover, strong outbound travel from Greater China benefited markets including Japan, Thailand and South Korea.

Notably, global travel demand and net room growth fueled record fee generation. Also, significant progress on asset dispositions is further expanding the asset-light earnings mix, which is reflected in the company’s execution to permanently reduce owned real estate.

However, rising real estate taxes, higher wages, and transaction costs related to asset sales in the process, along with soft comparable year-over-year contributions from ALG Vacations and the Super Bowl in Phoenix partially offset the aforementioned tailwinds.

Following the results, shares of this global hospitality company dwindled 3.3% in the pre-market trading session on May 9.

Q1 Earnings & Revenues

Hyatt reported adjusted earnings per share (EPS) of 71 cents, missing the Zacks Consensus Estimate of 73 cents by 2.7%. In the year-ago quarter, the company reported an EPS of 41 cents.

Hyatt Hotels Corporation Price, Consensus and EPS Surprise

Revenues of $1.71 billion also marginally lagged the consensus mark of $1.72 billion by 0.4% but climbed 2% on a year-over-year basis. The year-over-year uptick in revenues can be attributable to 8.6% growth in Management and Franchising fees to $262 million. This was partially offset by Owned and Leased, and Distribution fees declining 1.6% year over year to $309 million and 2.7% to $319 million, respectively.

Operating Highlights

Adjusted EBITDA was $252 million, down 5.9% year over year. Our model predicted the metric to be $312.5 million, up 16.6% year over year. Adjusted EBITDA margin contracted to 14.7% by 130 basis points (bps) from 16% reported in the year-ago quarter.

Adjusted EBITDA of Management and Franchising increased year over year by 10.2% to $203 million. On the other hand, Owned and Leased, and Distribution segments’ adjusted EBITDA dwindled 16.5% and 31.7%, respectively, compared with the prior year period.

Balance Sheet

As of Mar 31, 2024, Hyatt reported cash and cash equivalents of $794 million compared with $896 million reported in the previous quarter. Total liquidity was $2.3 billion in the first quarter end. Total debt as of Mar 31, 2024, was $3.06 million, implying a sequentially flat growth rate.

Other Business Updates

Regarding hotel openings, 12 new hotels (or 2,425 rooms) joined Hyatt's system in the first quarter, thus taking the total hotel count to 1,341 hotels (or 323,405 rooms). As of Mar 31, 2024, Hyatt had a pipeline of executed management or franchise contracts for approximately 670 hotels (or about 129,000 rooms).

Updated 2024 Outlook

For 2024, the company expects adjusted general and administrative expenses to be between $425 million and $435 million. Capital expenditures are projected to be approximately $170 million. Net room growth is anticipated to be between 5.5% and 6% year over year.

Management anticipates 2024 system-wide RevPAR to rise 3-5% from 2023 levels. Adjusted EBITDA is now expected to be in the range of $1.15-$1.19 billion compared with the prior expected range of $1.18-$1.23 billion. Gross fees are expected between $1.1 billion and $1.13 billion.

Zacks Rank & Recent Consumer Discretionary Releases

Hyatt currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boyd Gaming Corporation BYD reported mixed first-quarter 2024 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and bottom lines declined on a year-over-year basis.

During the quarter, the company’s performance was impacted by January's severe winter weather in the Midwest and South and a softer Las Vegas local market. The combined effect of these challenges fell within the anticipated range, aligning with earlier projections of $20-$25 million in EBITDAR for 2024.

Royal Caribbean Cruises Ltd. RCL posted stellar first-quarter results, with earnings and revenues beating the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.

RCL benefited from robust demand, strong pricing (on closer-in demand) and solid onboard spending. The company also raised its 2024 adjusted EPS guidance on the back of an exceptional WAVE season and continued strong demand.

Hilton Worldwide Holdings Inc. HLT reported solid first-quarter results, with earnings and revenues beating the Zacks Consensus Estimate and rising year over year.

The company's performance was backed by notable improvements in RevPAR, attributed to higher occupancy rates and ADR. It also benefited from its fee-based business model and robust development initiatives. HLT maintained its momentum in signings, starts and openings, reflecting a solid pipeline. Based on the growth trajectory observed so far, the company is optimistic about sustaining the momentum in the near future.

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