First quarter growth has been inconsistent among U.S. hotel brands with several beating analysts’ expectations, and others like Hyatt citing weak demand as the continued cause of their depressed profits.
Hyatt Hotels Corp., the chain controlled by the Pritzker family, said first-quarter profit fell 20 percent as renovations cut into revenues and demand declined for rooms booked in groups. The stock fell the most since October.
Net income fell to $8 million, or 5 cents a share, from $10 million, or 6 cents, a year earlier, the Chicago-based company said today in a statement. The average estimate of 14 analysts was 8 cents a share, according to data compiled by Bloomberg.
Revenue per available room, an industry measure of occupancy and rates known as revpar, “was negatively impacted by renovations at certain managed hotels” and a slowdown in the group business, Hyatt said. The shift of Easter this year to March from April last year hurt group demand, the company said. Groups are defined as blocks of 10 or more rooms.
“Results came in below our expectations largely driven by weak performance across full-service hotels, especially in the U.S., impacted by renovations and group segment weakness,” Nikhil Bhalla, an analyst at FBR & Co. in Arlington, Virginia, said in a note following the earnings release. He has the equivalent of a hold rating on the stock.
Hyatt fell as much as 5.8 percent to $40.22 in New York Stock Exchange composite trading. The stock was priced at $40.32 as of 9:57 a.m. That cuts this year’s gain to 4.8 percent and gives the company a market value of $6.66 billion.
Revenue from groups at full-service hotels in the U.S. decreased 5.8 percent in the first quarter from a year earlier and the number of nights booked fell 7.4 percent. Revpar at full-service hotels in North America increased 2.7 percent. Total revpar climbed 2.4 percent.
Adjusted earnings, which exclude some one-time items, increased to 9 cents a share from 3 cents a year earlier. The Hyatt directors approved a $200 million share buyback from investors.
Marriott International Inc., the largest publicly traded U.S. hotel chain, is scheduled to report earnings after the market close today.
Editors: Ross Larsen and Jeffrey St.Onge.
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Photo credit: The exterior of the Hyatt Regency in La Jolla, California. Enrique Sanabria / Hyatt