Travel demand in China has continued to recover despite financial turmoil in the country. Hyatt is optimistic that the rise of China's middle class will, long run, also benefit Hyatt's high-end brands.
Hyatt has bet more of its future on China than any other Western hotel group. It has 40% of its hotel pipeline there — a greater percentage than the hotel development pipeline of any public company in its peer group.
Yet China’s economic growth post-pandemic has been sluggish as it struggles with a commercial property crisis and a municipal debt crisis. But Hyatt executives remained confident in their China strategy, as China’s leaders intervened this week.
“We’re seeing a very strong continuous pipeline growth,” said president and CEO Mark Hoplamazian. “I feel really good about the short term.”
“It’s going to take the Chinese government a while to work through the bad bank issue that they’ve got with [commercial property developers] Country Garden and Evergrande. But in the foreseeable future, I’m actually optimistic that we’re going to be able to maintain both net rooms growth, but also pipeline growth.”
Robust Quarter for Hyatt
Hyatt produced notable results in the three months ending September 30.
- The company achieved a new record total fee revenue of $250 million.
- It generated an adjusted net income of $75 million on $800 million in revenue (after subtracting what’s owed to hotel owners).
- Its adjusted net income was up 92% versus 2019.
- It generated $247 million in adjusted earnings before interest, taxes, depreciation, and amortization — which was 51% above the comparable 2019 figure pre-pandemic.
- The advance booking pace for Hyatt’s all-inclusive (Apple Leisure Group) upscale resorts in Cancun is up 8% for the December festive period and up 12% for the first quarter of 2024.
More: Hyatt Pulls Off a Business Travel Comeback
Hyatt: China Travel Is Resilient
Demand for premium and luxury hotel rooms in China is improving as international travel is steadily recovering, Hyatt executives said. Hyatt hotel demand in the third quarter was down from 2019 levels by only the mid-to-high teens, representing a recovery from being down 60% at the start of the year.
“So we are seeing a steady increase in international inbound, which is really encouraging and a little surprising to me, actually, because air, air schedules are still well below where they were before,” Hoplamazian said. “The relevance of that is that the inbound international travelers are spending more.”
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Photo credit: Hyatt Regency Shanghai Global Harbor: Source: Hyatt.