Hyatt Hotels Corporation (NYSE: H) yesterday reported second-quarter 2021 financial results. Net loss attributable to Hyatt was $9 million, or $0.08 per diluted share, in the second quarter of 2021, compared to net loss attributable to Hyatt of $236 million, or $2.33 per diluted share, in the second quarter of 2020. Adjusted net loss attributable to Hyatt was $117 million, or $1.15 per diluted share, in the second quarter of 2021, compared to Adjusted net loss attributable to Hyatt of $183 million, or $1.80 per diluted share, in the second quarter of 2020. Refer to the table on page 11 of the schedules for a summary of special items impacting Adjusted net loss and Adjusted losses per diluted share for the three months ended June 30, 2021 and June 30, 2020.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, "Second quarter results improved significantly as travel demand rebounded sharply in certain markets. While leisure travel continues to lead the recovery, we are very encouraged by continued improvements in business transient and group. Accelerating RevPAR growth expanded our operating leverage and as a result we generated positive Adjusted EBITDA and operating cash flow in the quarter."
Second quarter of 2021 highlights are as follows:
- Net losses decreased compared to the second quarter of 2020 to a $9 million net loss.
- Adjusted EBITDA increased compared to the second quarter of 2020, to $55 million.
- Comparable system-wide RevPAR increased to $72.47 in the second quarter of 2021, and decreased 49.8% compared to the second quarter 2019 on a reported basis.1
- Comparable owned and leased hotels RevPAR increased to $86.66 in the second quarter of 2021 and decreased 53.4% compared to the second quarter 2019 on a reported basis.1
- Net rooms growth of 7.1%.
- As of June 30, 2021, the Company had cash, cash equivalents and short-term investments of $1,737 million.
Mr. Hoplamazian continued, "While the recovery is likely to remain uneven over the coming months, we remain confident in continued momentum in RevPAR growth given positive forward-looking indicators in our business. Furthermore, the strength of our brands continues to yield industry-leading net rooms growth. We opened 100 properties over the last twelve months and maintain a strong pipeline representing over 40% of our existing rooms."
OPERATIONAL UPDATE
Comparable system-wide RevPAR strengthened over the course of the second quarter of 2021, increasing nearly 30% from April to June 2021, and reaching the highest level since February 2020. Results in the second quarter were driven by very strong leisure transient demand, particularly in the United States and Greater China, where leisure transient revenue was fully recovered to 2019 levels. Group and business transient demand also gained momentum through the second quarter.
Comparable owned and leased hotels RevPAR strengthened through the second quarter of 2021, increasing nearly 50% from April to June 2021. At June 30, 2021, comparable owned and leased hotels RevPAR was at an approximate 30% premium to comparable system-wide RevPAR, consistent with historical trends. The RevPAR premium drove significant operating leverage resulting in $12 million of Adjusted EBITDA in owned and leased hotels segment in the second quarter, nearly all of which occurred in the month of June.
As of June 30, 2021, 98% of total system-wide hotels (97% of rooms) were open.
SECOND QUARTER RESULTS
Second quarter of 2021 financial results as compared to the second quarter of 2020 are as follows:
Management, Franchise and Other Fees
Management and franchise fee revenues totaled $77 million in the second quarter of 2021 compared to $12 million reported in the second quarter of 2020, and reflected a sequential improvement from $49 million reported in the first quarter of 2021. The increase in total management and franchise fee revenues reflects a continued demand recovery from the onset of the COVID-19 pandemic inclusive of incentive fees which benefited from favorable operating leverage. Other fee revenues increased 99.9% to $16 million driven primarily by an increase in license fees related to our co-branded credit card.
Americas Management and Franchising Segment
Americas management and franchising segment Adjusted EBITDA increased to $54 million in the second quarter of 2021 compared to $(3) million reported in the second quarter of 2020. Results were led by the strong recovery in the United States. At June 30, 2021, 99% of Hyatt's Americas full and select service hotels (98% of rooms) were open.
Americas net rooms increased 5.2% compared to the second quarter of 2020.
Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia (ASPAC) Management and Franchising Segment
ASPAC management and franchising segment Adjusted EBITDA increased to $10 million in the second quarter of 2021 compared to $(2) million reported in the second quarter of 2020. Results across the region were led by Greater China. At June 30, 2021, 96% of Hyatt's ASPAC full and select service hotels (97% of rooms) were open.
ASPAC net rooms increased 13.5% compared to the second quarter of 2020.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising Segment
EAME/SW Asia management and franchising segment Adjusted EBITDA increased to $(1) million in the second quarter of 2021 compared to $(11) million reported in the second quarter of 2020. Results across the region were driven primarily by recovery in the Middle East and Eastern Europe and reduced selling, general, and administrative expenses. At June 30, 2021, 97% of Hyatt's EAME/SW Asia full and select service hotels (96% of rooms) were open.
EAME/SW Asia net rooms increased 7.5% compared to the second quarter of 2020.
Owned and Leased Hotels Segment
Total owned and leased hotels segment Adjusted EBITDA increased to $12 million in the second quarter of 2021 compared to $(78) million reported in the second quarter of 2020. Owned and leased hotels segment results improved meaningfully over the quarter led by strong leisure transient demand in various markets in the United States. Refer to the table on page 9 of the schedules for a detailed list of portfolio changes and the year-over-year net impact to total owned and leased hotels segment Adjusted EBITDA.
At June 30, 2021, 97% of Hyatt's owned and leased hotels (92% of rooms) were open.
Corporate and Other
Corporate and other Adjusted EBITDA increased 4.2% to $(21) million, reflecting a $2 million improvement as compared to the second quarter of 2020. This increase was primarily due to an increase in license fees related to Hyatt's co-branded credit card, and partially offset by increased selling, general, and administrative expenses.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses decreased 14.3%, inclusive of rabbi trust impact and stock-based compensation. Adjusted selling, general, and administrative expenses increased 1.9% to $57 million, as a result of increases in payroll and related costs and partially offset by a decrease in bad debt expense. Refer to the table on page 13 of the schedules for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
Income Taxes
The Company received a U.S. tax refund of $254 million in July of 2021 in connection with 2020 net operating losses carried back to prior years under the CARES Act. This was included in prepaid income taxes on our condensed consolidated balance sheet at June 30, 2021.
OPENINGS AND FUTURE EXPANSION
Twenty-seven new hotels (or 4,302 rooms) opened in the second quarter of 2021, contributing to a 7.1% increase in net rooms compared to the second quarter of 2020.
As of June 30, 2021, the Company had executed management or franchise contracts for approximately 495 hotels (or approximately 101,000 rooms). This compares to approximately 490 hotels (or approximately 100,000 rooms) as of March 31, 2021.
TRANSACTION / CAPITAL STRATEGY UPDATE
During the second quarter, the Company completed the following transactions:
- On June 3, 2021, a Hyatt affiliate acquired the 59-room Ventana Big Sur, an Alila Resort, located in Big Sur, California for approximately $148 million, securing the Company’s long-term brand presence in a highly sought-after resort destination.
- On June 4, 2021, a Hyatt affiliate sold the 490-room Hyatt Regency Lost Pines Resort and Spa near Austin, Texas for approximately $275 million to an unrelated third party and entered into a long-term management agreement.
The Company intends to successfully execute plans to sell approximately $1.5 billion of real estate by March 2022 as part of its capital strategy announced in March of 2019. As of June 30, 2021, the Company has realized net proceeds of approximately $1.1 billion towards that goal while continuing to expand its management and franchising business.
SHARE REPURCHASE / DIVIDEND
There were no Class A or Class B shares repurchased during the second quarter of 2021. The Company ended the second quarter with 41,159,089 Class A and 60,623,918 Class B shares issued and outstanding. Effective March 3, 2020, the Company suspended all share repurchase activity, and suspended its quarterly dividend.
2021 OUTLOOK
The Company is providing the following guidance for the 2021 fiscal year:
- Adjusted selling, general, and administrative expenses are expected to be approximately $240 million. Refer to the table on page 13 of the schedules for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
- Capital expenditures are expected to be approximately $110 million.
- The Company expects net rooms growth to be greater than 6.0%.
No disposition or acquisition activity beyond what has been completed as of the date of this release has been included in the 2021 Outlook. The Company's 2021 Outlook is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that Hyatt will achieve these results.
BALANCE SHEET / LIQUIDITY
As of June 30, 2021, the Company reported the following:
- Total debt of $3,246 million.
- Pro rata share of unconsolidated hospitality venture debt of approximately $623 million, substantially all of which is non-recourse to Hyatt and a portion of which Hyatt guarantees pursuant to separate agreements.
- Total liquidity of approximately $3.2 billion based on cash and cash equivalents, including investments in highly-rated money market funds and similar investments, of $1,144 million, short-term investments of $593 million, and undrawn borrowing availability of $1,500 million under the revolving credit facility.
On August 16, 2021, Hyatt intends to pay the principal amount plus accrued and unpaid interest due on the Company's $250 million of 5.375% senior unsecured notes maturing on August 15, 2021 out of available cash on hand.
ABOUT HYATT HOTELS CORPORATION
Hyatt Hotels Corporation, headquartered in Chicago, is a leading global hospitality company offering 20 premier brands. As of June 30, 2021, the Company's portfolio included more than 1,000 hotel and all-inclusive properties in 68 countries across six continents.
1 RevPAR percentage changes calculated from comparable system-wide and comparable owned and leased hotels RevPAR of $144.48 and $186.05, respectively, as reported for the second quarter of 2019.