Hyatt’s 2nd Quarter Earnings
As we have seen over the past few months travel providers are under intense pressure. From new regulatory requirements because of COVID-19 to an overall lack of demand, it’s safe to say things won’t be back to normal for quite some time. Heck, when Vegas casinos are losing a billion dollars you know something is wrong!
In the hotel space a number of challenges are currently being tackled. First, hotels are still reopening from their closures earlier in the year. You also have a lack of demand, new training requirements, restrictions on bars/restaurants in many areas, etc. So how does this affect the bottom line?
Hyatt Releases 2nd Quarter 2020 Earnings
Hyatt released their 2nd quarter earnings today which shed some light on what the current situation is and it’s not pretty. To start, they lost $236 million compared to a profit of $86 million in the same quarter of last year. Here are some other interesting numbers:
- Net income (loss) decreased 376.0% to a net loss of $236 million.
- Adjusted EBITDA decreased 154.6% to $(117) million.
- Cash and cash equivalents of $1,438 million.
- Comparable system-wide RevPAR decreased 89.4%.
- Net rooms growth of 5.8%.
- Pipeline of executed management or franchise contracts for approximately 101,000 rooms, an increase of approximately 9.8% compared to the second quarter 2019.
Hyatt’s President and CEO Mark Hoplamazian said the following about the results, “There remains uncertainty regarding the full return of hotel demand to pre-COVID-19 levels. We are encouraged by the demand progression we have seen in China and also in certain markets in the U.S. and other parts of the world. Our teams are prepared for varied recovery scenarios sustained by continuously evolving new ways of operating that reduce the occupancy levels that are required to break even at the hotel operating level. Our balance sheet, including nearly $3 billion of liquidity, is a great source of strength as is the support and partnership of our hotel owner community. We continue to navigate this dynamic situation, and expect to emerge stronger when the pandemic subsides and demand returns.”
Hyatt Is Reopening Most Hotels
As part of the announcement Hyatt detailed how their hotels are doing across the system. Of interest to me was the fact that as of July 31, 2020 87% of Hyatt hotels were reopened. With that said revenue per available room was still down a whopping 76% from July 2019 to July 2020.
They go on to say that China is driving the recovery for them which makes a lot of sense given their timing with the pandemic. They were able to reopen sooner and haven’t had widespread outbreaks recently. “Greater China, where the impacts of the COVID-19 pandemic were first reported, continues to lead the recovery. RevPAR in Greater China has shown continued improvement since May, with preliminary estimates indicating occupancy reaching approximately 57% at the end of July. Excluding Hong Kong, Macau, and Taiwan, preliminary estimates indicate occupancy in China reached approximately 65% at the end of July.”
Hyatt Is Still Expanding
As anyone who follows Hyatt knows they are constantly working to expand. Most of their expansion as of late has been in limited service Hyatt Place and Hyatt House locations, but they have also added a number of notable full service locations in the past few years. In the second quarter they added 10 new hotels or 5.8% more rooms to their portfolio. They also have about 500 properties under contract for development.
You can find even more details in Hyatt’s press release.
Hyatt’s 2nd Quarter Earnings – Bottom Line
Hyatt just like every travel provider is hurting. It’s good to see the majority of their properties are reopening and that in some markets a recovery has begun. Still, there are significant challenges for Hyatt and other brands as we progress through this pandemic and I suspect this won’t be the last ugly earnings report we see.
What do you think about Hyatt’s numbers? Do they surprise you?
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[…] Hyatt’s Earnings Announced: Staggering Losses & Revenue Per Room Down 89% – Miles to Memories […]
It was amazing that the stock price barely moved with this sad news. I used to own their stocks but sold before earnings.