HYATT YOUTUBE

In preparation for Hyatt’s Q4 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from Hyatt’s Q3 earnings call.


 

YOUTUBE

  • “During the third quarter, occupancy levels, as compared to the prior year, increased in over 75% of the hotels that we operate around the world. Average rates at our full-service hotels increased this quarter on a global basis. This was a continuation of rate increases that we saw internationally earlier in the year, and in North America the increase came primarily as a result of the shift in business mix from lower rated transient to higher rated transient business and increased group demand.”
  • “As a part of our strategy to recycle capital, in order to expand and increase distribution, we expect to be in the market from time to time on both the buy-side and the sell-side. As we mentioned on our last earnings call, we were exploring the sale of 11 properties, during the third quarter we sold one of those properties… at this time our best estimate is that we will sell between three and five additional hotels over the next few months. We expect to announce sales as they are closed. In terms of the remaining hotels that were a part of the group of 11 properties, it is unlikely that we will sell them in the near term.”
  • “Results in North America were negatively impacted by renovations at five owned properties”
  • “The margin [at owned hotels] improvement was largely a result of continued productivity gain and improved food and beverage profitability.”
  • “Our full-service hotels experienced a 20% increase in group room nights with essentially flat room rates compared to last year. The strength in the group business was partially a result of good turnout for association business that was on the books, as well as recently booked corporate business. Our food and beverage revenue has increased… driven by higher banquet and catering revenues as group customers increased spending in these areas. Expenditure by group customers in other areas, such as spa services, remains relatively weak.”
  • “The group revenue base for 2010 continued to improve through the third quarter and is up over 3% for the full year. In the quarter, bookings for the year were up over 60% based upon room nights and at higher rates, partially as a result of corporations booking meetings with relatively short lead times.”
  • “Our transient guest mix across different channels continued to improve as more business was realized through our own channels as opposed to third party owned websites, including discount internet channels”
  • “RevPAR in China increased approximately 50%, partially due to greater demand in Shanghai as a result of the World Expo. We experienced RevPAR growth in other Asia-Pacific region countries including Japan, Korea and Australia, between 5 and 10%. The southwest Asia region realized RevPAR growth lower than that of the other regions as RevPAR growth was still positive, was weaker in the GCC countries than in other parts of the region.”
  • “On capital expenditure, we have lowered our range to 250 to $260 million. Part of our capital expenditure relates to broad scale renovations at five of our owned hotels. Based on our estimates of displaced revenues, the fourth quarter 2010 negative impact is expected to be about 350 basis points to own and lease RevPAR and approximately $8 million of EBITDA. We estimate that during the first three quarters of 2011, the cumulative negative impact of the renovation at these five hotels could approximate between 300 to 350 basis points of RevPAR to our owned and leased segment and in the range of between 20 to $25 million of EBITDA.”
  • “Other information relating to 2010 is as follows; our estimate of depreciation and amortization expense is now slightly lower at between 275 million to 285 million, the interest expense range remains the same at between 50 to $55 million.”
  • “Our intent as we begun the [corporate rate] negotiations, is to try and seek, in any way from a mid to a high single-digit rate increase, the corporate rates are pushing back. They’re looking for a flat to a decrease. Given the uncertainty in the economy, especially in the U.S. things have lagged a little. But I think the industry is more focused in trying to get anywhere between mid to high single-digit rate increase.”
  • “Now what’s beginning to happen is because it’s an occupancy-driven recovery, we’re beginning to add staff, especially hourly staff in the hotels to keep pace with the occupancy that’s happening. We’re still tight relative to management staffing and we’ll continue to be tight on management staffing, to the extent we can. The only other thing I would say in terms of costs and the implications going forward is that we have incorporated wage inflation this year. So we are giving merit increases, we’ve continued to give merit increases as we look into 2011. Bonuses have been reinstituted, and as results delivery expectations that’s going to happen. The one uncontrollable or two uncontrollable at this point of time, are heat, energy costs, and second is healthcare cost. We try and limit the increases to the extent we can. But those are the factors we bear in mind as we think forward relative to cost management both at the hotels and in corporate.”

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