Hyatt's forecast for 2023 in one phrase? World boom ahead.
Hyatt Hotels Corp., which enjoyed a blockbuster financial performance in 2022, forecasted Thursday continued success this year, especially in the first half. The company expects to benefit from growing consumer interest in its lifestyle, luxury, and resort properties, returning group reservations for its banquet halls, and an expanding room count.
“We concluded the year with another record-breaking quarter,” said president and CEO Mark Hoplamazian. “Rates remained strong, up 14 percent above 2019 levels during the quarter, while occupancy continued to recover.”
Looking ahead, Hyatt forecasted that it would generate 2023 system-wide revenue per room growth in the range of 10 percent to 15 percent compared to 2022. Executives implied that gains in room rates and occupancy for leisure travelers worldwide would primarily drive the outsized performance.
Group bookings will also help, they said. Hyatt’s system-wide revenue from group reservations fully recovered to 2019 levels in the quarter — a trend that executives anticipated would continue this year, too.
Growth in Rates
In the fourth quarter, Hyatt saw 2.4 percent growth in its system-wide revenue per available room — a key industry metric — compared to the pre-pandemic quarter in 2019. That figure was up 6.6 percent when excluding pandemic-struck China.
The company chalked up the performance to strong pricing power. Its leisure transient average rates were up 19 percent over the pre-pandemic level, and its rates for group bookings were up 15 percent compared with 2019.
Occupancy across the company’s 912 managed and franchised hotels in the quarter was 63.5 percent — below the 72 percent level of 2019.
Record Earnings Level
During the fourth quarter, the Chicago, Illinois-based hotel operator produced a profit of $294 million on $1.59 billion in revenue. Net income was down about 9 percent versus 2019. Revenue was up 24 percent versus 2019’s comparable quarter.
Hyatt generated in the quarter $232 million in adjusted earnings before interest, taxes, depreciation, and amortization — which was 21 percent above the comparable figure for the pre-pandemic period in 2019.
The company largely credited its robust performance to a record level of fees for managing hotels on behalf of partner owners. The company’s luxury hotel performance in the Americas was 23 percent higher in the quarter than in 2019.
Resorts were another driver. The company’s all-inclusive resorts, organized under its Apple Leisure Group, generated net package revenue per available room that was 24.4 percent higher in the quarter than in the same period in 2019 for the same set of properties.
Hyatt executives expected that the return of Asia Pacific travel to historical levels will help boost occupancy worldwide. It believes the gains will outpace rising costs. Operational costs worldwide rose in the quarter 43 percent, year-over-year, to $751 million.
A tailwind for the company this year will be its steady growth in property count, executives predicted. Last year, the company added 120 hotels to its portfolio, 20 percent more than in its previous record year. Many of these rooms are set to generate higher-than-average revenues and fees because they are in the higher-end luxury, lifestyle, or resort segment. Such categories made up 66 percent of the rooms Hyatt added in 2022.
“In only five years, we’ve doubled the number of luxury rooms, tripled the number of resorts, and quadrupled the number of lifestyle rooms in our portfolio,” Hoplamazian said. “We now have more luxury branded hotels in resort locations than any other hospitality company in the world.”
Hyatt forecasted it would expand its net room count this year by 6 percent. That was higher than Hilton’s or Marriott’s guidance for their systems, though Hyatt works from a smaller portfolio base than those companies.
Hyatt ended the year with an all-time high development pipeline of 117,000 rooms, about 40 percent of which are in China.
Hyatt’s loyalty program has been helping to support growth. In May, it enabled members of the World of Hyatt program to earn and redeem points for stays at the all-inclusives it acquired when it bought Apple Leisure Group in 2021.
Hyatt ended 2022 with 17 percent of rooms booked at the all-inclusive resorts being booked by Hyatt loyalty members. Over the year, the company signed more than 315,000 new World of Hyatt members at the resorts.
Over the past five years, Hyatt has boosted membership in its program by 38 percent to 36 million.
The company plans to sell about $1.3 billion in hotel real estate by the end of 2024. Those sales would give it more capital to use for acquisitions of travel businesses and return money to shareholders.
“In the past five years, we invested approximately $3.6 billion to acquire three platforms: Miraval [a set of a few wellness resorts], 2 Roads Hospitality [a group of lifestyle hotels], and Apple Leisure Group,” Hoplamazian said, while also noting the company’s recent acquisition of Dream Hotel Group. “I’m incredibly proud of how we’ve executed our strategy over the past five years and look forward to continuing this momentum into the future.”
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Photo credit: The lobby of the Grand Hyatt Abu Dhabi. Source: Hyatt. Hyatt