Why Is Hyatt Hotels (H) Up 8.5% Since Its Last Earnings Report?
Zacks Equity Research
ZacksJune 1, 2018
It has been about a month since the last earnings report for Hyatt Hotels Corporation H. Shares have added about 8.5% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is H due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Hyatt Q1 Earnings Beat, Revenues Miss, Margins Fall
Hyatt Hotels posted mixed results in the first quarter of 2018, wherein earnings surpassed the Zacks Consensus Estimate while revenues lagged the same.
Adjusted earnings of 33 cents per share beat the consensus estimate of 29 cents by 13.8%. Earnings, however, fell 51.5% year over year, reflecting pressure on the quarter’s EBITDA margin.
Total revenues of $1.11 billion declined 1.5% from the prior-year quarter due to lower contribution from owned and leased hotels. Revenues also missed the consensus estimate of $1.14 billion by 2.6%
RevPAR Details
In the quarter, comparable system-wide revenues per available room(RevPAR) increased 4.3%, taking into account an increase of 1.6% at comparable owned and leased hotels. Excluding the effect of Easter holiday timings,comparable system-wide RevPAR increased 4.6%, and comparable owned and leased RevPAR inched up 2%.
Comparable U.S. hotel RevPAR increased 2.7%. Full-service hotel RevPAR rose 2.7% and that of select service hotel grew 2.8%. Excluding the impact of Easter holiday timing, comparable U.S. hotel RevPAR increased 3.1%, with full and select service hotel RevPAR increasing 3.3% and 2.8%, respectively.
Operating Highlights
In the first quarter, net income increased a whopping 643.6% to $411 million. Adjusted EBITDA declined 7.3% to $202 million (down 8.4% in constant currency). Adjusted EBITDA margin decreased 30 basis points (bps) to 30.7%.
Comparable owned and leased hotels operating margin increased 80 basis points to 24.3%.
Segment Details
Hyatt manages business through four reportable segments: Owned and Leased Hotels; Americas Management and Franchising; Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia (ASPAC) Management and Franchising; and Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising.
Owned and Leased Hotels revenues were $515 million, down 11.9% (13.3% in constant currency) from the year-ago figure.
In constant currency, comparable owned and leased hotels RevPAR increased 1.6%. ADR increased 0.9% and occupancy rose 50 bps from a year ago.
Adjusted EBITDA decreased 20.7% to $113 million. At constant currency, the same declined 21.3% due to transaction activities.
Revenues at Americas Management and Franchising were $98 million, reflecting an increase of 9.5% from the year-ago figure and a 9.2% rise at constant currency.
RevPARfor comparable Americas fullservice hotels increased 3.1%. ADR climbed 0.8% at constant currency and occupancy increased 170 bps from the year-ago quarter.
Meanwhile, RevPAR for comparable Americas select-service hotels rose 3.6%. Occupancy increased 150bps and ADR improved 1.5%.
Adjusted EBITDA increased 14.6% (up 14.3% in constant currency) to $87 million.
Revenues at ASPAC Management and Franchising rose 20.1% year over year (up 14.6% in constant currency) to $30 million.
RevPAR for comparable ASPAC full-service hotels increased 6.7%, driven by strong RevPAR growth in Greater China. Notably, occupancy rose 350 bps and ADR climbed 1.5% in the quarter under review.
Adjusted EBITDA increased 23.4% (up 16.1% at constant currency) to $18 million.
Revenues at EAME/SW Asia Management and Franchising increased 18.3% (12.8% in constant currency) year over year to $18 million.
Comparable EAME/SW Asiafull-service hotels’ RevPAR inched up 7%, driven by growth in Turkey, France and India. ADR increased 1% and occupancy rose 380 bps.
RevPAR for comparable EAME/SW Asia select-service hotels rose 6.1%. Occupancy increased 440 bps while ADR declined 0.7%.
Adjusted EBITDA increased 25.9% (up 19.8% at constant currency) to $10 million.
Balance Sheet
As of Mar 31, 2018, Hyatt reported cash and cash equivalents, including investments in highly-rated money market funds and similar investments, of $1,160 million, up from $503 million at the end of 2017.
