In preparation for Hyatt's Q3 earnings release, we’ve put together the pertinent forward looking commentary from Hyatt’s Q2 earnings release/call.
YOUTUBE FROM Q2
- “Strengthening group business is also important for us because it allows us to better manage yield relative to transient business as we see increased compression in hotels that have a mix of group and transient business.
- “We also expect to see higher corporate rates coming out of negotiations this fall.”
- “We are firm believers in the recycling of capital. This means that at any given time, we may be buying or selling hotels in order to put the capital that we have invested in hotel properties to work for us. For example, we’re currently exploring the sale of 11 properties consisting of approximately 4,500 rooms….We expect this to be a multi-month process, and we will announce completed transactions upon closing.”
- “Looking out a bit further, in the quarter bookings for all future periods were up approximately 35%, compared to the second quarter of 2009.”
- “Visibility on group remains low as booking windows are short.”
- “We have tightened the range on expected CapEx to 270 to 280 million. Most of that expenditure will take place in the third and fourth quarter as renovation spending at several of our larger owned hotels ramps up. These projects are currently tracking on time and on budget and will continue into next year as planned, particularly the large renovations at the Grand Hyatt properties in New York and San Francisco.”
- “Our estimated depreciation and amortization expense remains the same at 285 to 295 million, and our interest expense range has been slightly lowered to 50 to $55 million.”
- “With respect to growth in openings this year, we said during the last call that we expected to open more than 25 hotels, and I think that’s our current outlook. That was an increase from prior estimate that we had had, which was more than 20. Part of that has to do with some conversions, part of that has to do with some uncertainty about exactly when properties that are under construction will complete and, therefore, be able to open. So that remains our current expectation and outlook for this year.”
- “Relative to our expense projection, we expect expenses to continue to increase, largely because we believe there will be wage inflation. We hadn’t taken merit increases last year. We restored bonuses from that perspective. So, I think you will see increase in expenses continue.”
- [# of FTEs] “So we are going to keep that at current levels, at least in the short term.”
- “In terms of hourly staff, that’s more of a variable expense, and we are beginning to see staffing increase for that group of colleagues, largely because the recovery so far has been demand driven. Now, the key question is going to be, relative to our profit flow-through, is how rates progress over the next six to 12 months.”
- [Transaction environment] “And with respect to the evolution of the opportunities over time, I do believe that there will be a further increase of activity and opportunities both in the latter half of this year and into 2011, and I think a lot of it has to do with people, owners and lenders alike, evaluating what their overall alternatives are. And, at least based on what we’re seeing to date, there has been more interest in trying to put a deal together to put an asset on to a different track, let’s say, or bring in a partner in order to help recapitalize. So, I think it’s very clear that, at least around our offices, we’ve got a lot more activity underway now than we did before.”
- [Corporate negotiation rates for 2011] “Our best guess at this point is maybe somewhere in the high-single digits. The only other thing on the corporate negotiation I’ll say, in terms of the sectors where we are negotiating-- the technology, the manufacturing and the financial segments are up; transportation is overall down.
- [Group rates for 2011] “Tracking in the low double-digits; however, pace is still negative at this point of time, but again, that’s largely because the visibility and the lead times is fairly short at this point of time.”
- [For 2H 2010, EBITDA impact from renovations] “From a RevPAR perspective, we think for our owned and leased segment, RevPAR is going to be impacted between 200 to 250 basis points. And, if I just take you back to what we had indicated in terms of the sensitivity on RevPAR, one point is anywhere between 10 and $15 million on an annualized basis. We think the EBITDA, in fact, is closer to $10 million or so in the second half of the year…. The renovations will continue until Q4 2011."
- [International] So the booking curve, so to speak, or the outlook tends to be quite short.
- “There are opportunities for capital deployment in Europe, mostly for management deals, less so for acquisitions, although we are also looking at and for acquisition opportunities in India on the JV basis and in Latin America also on a JV basis.”
