Hyatt Reports Third Quarter 2022 Results

Total Fee Revenue Exceeds 2019 by 50%; Raises Full Year Outlook for RevPAR and Net Rooms Growth

Hyatt Hotels Corporation (NYSE: H) today reported third quarter 2022 financial results. Highlights include:

• Net income was $28 million in the third quarter of 2022 compared to net income of $120 million in the third quarter of 2021. Adjusted net income was $72 million in the third quarter of 2022 compared to Adjusted net income of $241 million in the third quarter of 2021.
• Diluted EPS was $0.25 in the third quarter of 2022 compared to $1.15 in the third quarter of 2021. Adjusted Diluted EPS was $0.64 in the third quarter of 2022 compared to $2.31 in the third quarter of 2021.
• Adjusted EBITDA was $252 million in the third quarter of 2022 compared to $110 million in the third quarter of 2021. Apple Leisure Group ("ALG") contributed $78 million of Adjusted EBITDA in the third quarter of 2022.
  • Adjusted EBITDA does not include ALG's Net Deferrals of $17 million and Net Financed Contracts of $26 million in the third quarter of 2022.
• Comparable system-wide RevPAR increased 45.9% to $133.31 and comparable U.S. hotel RevPAR increased 35.6% to $147.70 in the third quarter of 2022 compared to the third quarter of 2021.
• Comparable owned and leased hotels RevPAR increased 47.4% to $177.24 in the third quarter of 2022 compared to the third quarter of 2021. Comparable owned and leased hotels operating margin improved to 24.1% in the third quarter of 2022.
• All-inclusive Net Package RevPAR was $176.61 and all-inclusive Average Daily Rate was $243.75 in the third quarter of 2022.
• Net Rooms Growth was 18.7%, or 4.5% when excluding ALG, in the third quarter of 2022.
• Pipeline of executed management or franchise contracts was approximately 114,000 rooms, inclusive of ALG's pipeline contribution of 8,000 rooms.
• Share Repurchase activity in the third quarter of 2022 was approximately 1.87 million shares repurchased for $162 million.

Mark S. Hoplamazian, President and Chief Executive Officer of Hyatt, said, "We had a tremendous quarter that demonstrates our unique positioning and differentiated model. We reported total fee revenue that exceeded 2019 by 50%, raised our full year 2022 Net Rooms Growth outlook to approximately 6.5%, and expanded our pipeline to 114,000 rooms. Our greater mix of fee based earnings is driving record results and significant free cash flow. We continue to see demand accelerating and our outlook remains optimistic based on our latest booking trends."

Operational Update

Comparable system-wide RevPAR increased 2.0% in the third quarter compared to the same period in 2019 driven by an increase in average rate of 13.6%. In the month of September, comparable system-wide RevPAR increased 3.1% compared to 2019 reflecting an improved contribution from group and business transient revenue.

The ALG all-inclusive portfolio continues to experience favorable trends. Net package RevPAR for the same set of properties managed by ALG in the Americas increased 29% in the third quarter compared to the same period in 2019. Total Net Package Revenue for all ALG properties increased 91% in the third quarter compared to 2019 reflecting the impact of net rooms growth fueled by ALG's organic growth in the Americas and significant expansion into Europe.

Segment Results and Highlights

¹ Effective January 1, 2020, the results of Miraval are reported in the owned and leased hotels segment and Americas management and franchising segment. Fees from Hyatt Residence Club are reported in the Americas management and franchising segment. These changes are also reflected for the three months ended September 30, 2019.

• Owned and leased hotels segment: Comparable operating margins improved to 24.1%, reflecting strong operational execution and growth in average daily rates. Owned and leased hotels Adjusted EBITDA increased $19 million, or 41%, when adjusted for the net impact of transactions, in the third quarter compared to the same period in 2019.
• Americas management and franchising segment: Results were led by the continued strength in leisure demand, strong group recovery, and improved business transient demand. New hotels added to the system since the start of 2019 contributed $16 million in fee revenue.
• ASPAC management and franchising segment: Results reflect lower demand in Greater China while the remainder of the region improved from the easing or elimination of travel restrictions.
• EAME/SW Asia management and franchising segment: Results were led by Western Europe which benefited from strong international inbound demand and India which benefited from strong domestic demand.
• Apple Leisure Group segment: Results were led by the continued strength of leisure travel demand, favorable pricing, and airlift that remains above 2019 levels for key Americas destinations.

Openings and Development

During the third quarter, 22 new hotels (or 4,243 rooms) joined Hyatt's system. Notable openings included Dreams Cozumel, Hyatt Regency Lisbon, Park Hyatt Jakarta, Thompson Madrid, and Unbound Magma Resort Santorini.

As of September 30, 2022, the Company had a pipeline of executed management or franchise contracts for approximately 550 hotels (approximately 114,000 rooms), inclusive of ALG's pipeline contribution of approximately 20 hotels (or approximately 8,000 rooms).

Transactions and Capital Strategy

On October 1, 2022, the Company sold the entity that was the operating lessee of the Hyatt Regency Mainz in Germany for a nominal amount to an unrelated third party and entered into a long-term franchise agreement. On October 5, 2022, the Company sold Hyatt Regency Greenwich in Connecticut for approximately $40 million to an unrelated third party and entered into a long-term management agreement.

The Company intends to successfully execute plans to sell $2.0 billion of real estate, net of acquisitions, by the end of 2024 as part of its expanded asset-disposition commitment announced in August 2021. As of November 3, 2022, the Company has realized $721 million of proceeds from the net disposition of owned assets as part of this commitment.

Balance Sheet and Liquidity

As of September 30, 2022, the Company reported the following:

• Total debt of $3,804 million.
• Pro rata share of unconsolidated hospitality venture debt of $582 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 $2.9 billion with $1,374 million of cash and cash equivalents and short-term investments, and borrowing availability of $1,496 million under Hyatt's revolving credit facility, net of letters of credit outstanding.
  • Total liquidity excludes approximately $300 million of restricted cash to redeem floating rate senior notes.

On October 1, 2022, the Company redeemed its floating rate senior notes due 2023 for approximately $302 million, inclusive of $300 million aggregate principal and $2 million of accrued interest, using restricted cash. On October 28, 2022, the Company redeemed its 3.375% senior notes due 2023 for approximately $353 million, inclusive of $350 million aggregate principal and $3 million of accrued interest, using available cash and cash equivalents. As a result of these transactions, the total outstanding principal on the Company's senior notes was $3,135 million as of October 31, 2022.

During the third quarter, the Company repurchased a total of 1,865,489 Class A common shares for approximately $162 million. The Company ended the third quarter with 48,412,428 Class A and 59,017,749 Class B shares issued and outstanding. From October 1 through October 31, 2022, the Company repurchased 327,556 shares of Class A common stock for an aggregate purchase price of approximately $27 million. Through the first ten months of the year, the Company has repurchased approximately $290 million of Class A common shares. As of October 31, 2022, the Company had approximately $638 million remaining under its share repurchase authorization.

2022 Outlook

The Company is providing the following guidance for full year 2022: