HYATT REPORTS THIRD-QUARTER 2018 RESULTS; Reports Strong 7.6% Net Rooms Growth; Raises Full-Year Outlook for Shareholder Capital Returns to Approximately $1.0 Billion.
ENPNewswire-November 2, 2018--HYATT REPORTS THIRD-QUARTER 2018 RESULTS; Reports Strong 7.6% Net Rooms Growth; Raises Full-Year Outlook for Shareholder Capital Returns to Approximately $1.0 Billion
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Release date- 01112018 - CHICAGO - Hyatt Hotels Corporation ('Hyatt' or the 'Company') (NYSE: H) today reported third-quarter 2018 financial results. Net income attributable to Hyatt was $237 million, or $2.09 per diluted share, in the third quarter of 2018, compared to $18 million, or $0.14 per diluted share, in the third quarter of 2017. Adjusted net income attributable to Hyatt was $37 million, or $0.33 per diluted share, in the third quarter of 2018, compared to $29 million, or $0.24 per diluted share, in the third quarter of 2017. Refer to the table on page 4 of the schedules for a summary of special items impacting Adjusted net income and Adjusted earnings per share in the three months ended September 30, 2018.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, 'We reported another quarter of solid growth, led by a 9% increase in management and franchise fees and 5% RevPAR growth at our owned and leased hotels, both on a constant-currency basis. Our outlook for the remainder of 2018 remains positive, including comparable system-wide RevPAR growth of 3.5% at the mid-point of our full-year guidance range.'
Third quarter of 2018 financial highlights as compared to the third quarter of 2017 are as follows:
Net income increased to $237 million, aided by gains on sales of real estate.
Adjusted EBITDA decreased 0.9% to $175 million, an increase of 0.1% in constant currency.
Comparable system-wide RevPAR increased 2.8%, including an increase of 5.3% at comparable owned and leased hotels.
Comparable U.S. hotel RevPAR increased 1.4%; full service hotel RevPAR increased 2.5% and select service hotel RevPAR decreased 1.1%.
Net rooms growth was 7.6%.
Comparable owned and leased hotel operating margin increased 70 basis points to 21.8%.
Adjusted EBITDA margin of 29.7% increased 240 basis points in constant currency.
Mr. Hoplamazian continued, 'We are continuing to execute our long-term growth strategy while returning meaningful capital to shareholders, enabled in part by our sell-down of real estate. Earlier this month, we announced plans to acquire Two Roads Hospitality, a high-end lifestyle hotel management company which we expect will expand the growth of our management and franchising business. We also increased our shareholder capital return expectations for 2018 to approximately $1.0 billion inclusive of share repurchases and dividends, and have a new $750 million share repurchase authorization.'
Third quarter of 2018 financial results as compared to the third quarter of 2017 are as follows:
Management, Franchise and Other Fees
Management, franchise and other fees increased 7.6% (8.7% in constant currency) to $133 million, driven by new hotels added to the system, hotel conversions from owned to managed, and strong operating performance at existing hotels. Base management fees increased 8.8% to $55 million and incentive management fees increased 6.4% to $33 million. Franchise fees increased 7.8% to $33 million. Other fees increased 4.5% to $12 million.
Americas Management and Franchising Segment
Americas management and franchising segment Adjusted EBITDA increased 1.0% (1.5% in constant currency). RevPAR for comparable Americas full service hotels increased 3.0%, occupancy decreased 20 basis points, and ADR increased 3.2%. RevPAR for comparable Americas select service hotels decreased (0.7)%, occupancy decreased 180 basis points, and ADR increased 1.5%. Revenue from management, franchise, and other fees increased 0.4% (0.8% in constant currency).
Transient rooms revenue at comparable U.S. full service hotels decreased 0.1%, room nights decreased 4.6%, and ADR increased 4.8%. Group rooms revenue at comparable U.S. full service hotels increased 4.9%, room nights increased 3.5%, and ADR increased 1.3%.
Americas net rooms increased 6.2% compared to the third quarter of 2017.
Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising Segment
ASPAC management and franchising segment Adjusted EBITDA increased 15.9% (18.4% in constant currency). RevPAR for comparable ASPAC full service hotels increased 2.5%, driven by increased occupancy across the region which was partially offset by certain natural disasters affecting Southeast Asia and Japan, and renovation activity. Occupancy increased 150 basis points and ADR increased 0.6%. Revenue from management, franchise, and other fees increased 11.4% (13.2% in constant currency).
ASPAC net rooms increased 12.1% compared to the third quarter of 2017.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising Segment
EAME/SW Asia management and franchising segment Adjusted EBITDA increased 16.0% (21.2% in constant currency). RevPAR for comparable EAME/SW Asia full service hotels increased 11.0%, driven primarily by strong growth in Russia, Western Europe, and Turkey. Occupancy increased 360 basis points and ADR increased 5.0%. Revenue from management, franchise, and other fees increased 17.0% (21.1% in constant currency).
EAME/SW Asia net rooms increased 9.0% compared to the third quarter of 2017.
Owned and Leased Hotels Segment
Total owned and leased hotels segment Adjusted EBITDA decreased 12.5% (12.0% in constant currency), including a 3.8% (0.6% in constant currency) decrease in pro rata share of unconsolidated hospitality ventures Adjusted EBITDA. The decrease in segment Adjusted EBITDA was driven by transaction activity in 2017 and 2018. Refer to the table on page 18 of the schedules for a detailed list of portfolio changes and the year-over-year net impact to total owned and leased hotels segment Adjusted EBITDA.
Owned and leased hotels segment revenues decreased 13.3% (12.9% in constant currency), reflecting the transaction activity referenced above. RevPAR for comparable owned and leased hotels increased 5.3%, reflecting mid single-digit RevPAR growth at U.S. hotels and high single-digit RevPAR growth at international hotels. Occupancy increased 190 basis points and ADR increased 2.8%.
Corporate and Other
Corporate and other Adjusted EBITDA increased 14.6% (14.5% in constant currency).
Corporate and other revenues increased 7.7% (consistent in constant currency), primarily driven by the acquisition of Exhale Enterprises, Inc. ('exhale') in August 2017.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses decreased 7.7%, inclusive of rabbi trust impact and stock- based compensation. Adjusted selling, general, and administrative expenses decreased 7.6%, primarily due to non-recurring marketing spending and severance costs incurred in 2017. Refer to the table on page 11 of the schedules for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
OPENINGS AND FUTURE EXPANSION
Twelve hotels (or 2,608 rooms) were opened in the third quarter of 2018. The Company's net rooms increased 7.6%, compared to the third quarter of 2017. The Company is on pace to open approximately 60 hotels in the 2018 fiscal year.
As of September 30, 2018, the Company had executed management or franchise contracts for approximately 340 hotels, or approximately 73,000 rooms, consistent with expectations at the end of the second quarter. This represents development pipeline growth of approximately 6%, compared to the third quarter of 2017.
ACQUISITION OF TWO ROADS HOSPITALITY LLC
On October 8, 2018, Hyatt announced an agreement to acquire Two Roads Hospitality LLC ('Two Roads'), a rapidly growing hotel management company for a base purchase price of approximately $480 million. Through the addition of Two Roads, Hyatt will expand...
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