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Another lackluster lodging release.

"Transient demand was very strong in the first quarter with both occupancy and rate improvements across many markets. We are very pleased with the performance of our hotels, particularly the strong continuing increases in RevPAR in our Hyatt Place and Hyatt Summerfield Suites properties."

- Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation


  • Hyatt reported $109MM of Adjusted EBITDA  - 4% below street estimates
  • "Comparable owned and leased hotels RevPAR increased 2.0% (1.4% excluding the effect of currency)"
    • "RevPAR for comparable owned and leased hotels is estimated to have been negatively impacted by approximately 400 basis points."
    • "Operating margins decreased 120 basis points"
    • "Adjusted EBITDA is estimated to have been negatively impacted by approximately $10 million due to renovations during the first quarter of 2011."
    • "Excluding expenses related to benefit programs funded through Rabbi Trusts and non-comparable hotel expenses, expenses increased 2.4% in the first quarter of 2011"
  • Comparable North American select-service RevPAR: +11.6%
  • Comparable International RevPAR: +11.0% (6.9% excluding the effect of currency)
    • "Adjusted EBITDA increased by 42.9% ...as a result of increased fee revenue from new hotels and non-recurring items."
  • "Our international hotels continued to perform well and we saw particularly strong performance in China and Brazil. There was some increased volatility in the results in the first quarter due to the devastating earthquake and tsunami and aftermath in Japan, as well as specific events in the Middle East and North Africa, but demand throughout Asia Pacific and Latin America was strong."
  • "Management and franchise fees ...increased approximately 23%, partially as a result of new managed or franchised hotels opened over the last few years in addition to RevPAR growth at existing hotels"
  • "Looking ahead, year-over-year North America group booking activity for future dates continues to be strong. This is encouraging as the booking window remains short and we are keeping a close eye on changes period-over-period. Recent activity gives us confidence in the recovery for the remainder of 2011 and beyond."
  • "As of March 31, 2011, this effort was underscored by executed management or franchise contracts for approximately 145 hotels (or more than 33,000 rooms) across all brands."
    • ~70% outside NA
  • 1Q11 Capex: $46MM ($9MM maintenance, $34MM enhancements to existing properties, $3MM investment in new facilities"
  • During 1Q11, Hyatt contributed the Hyatt Regency Minneapolis " to a newly-formed joint venture... in exchange for an ownership interest in the joint venture.... assigned a $25 million loan to the joint venture."
  • 1Q11 balance sheet items:
    • Debt: $770MM
    • Cash & equivalents: $1.1BN
    • Short term investments: $525MM
    • Undrawn R/C capacity: $1.1BN
  • 2011 guidance:
    • Capex: $380-400MM (includes renovation of 5 properties and expects negative impact on owned & leased segment through 3Q11)
    • D&A: $275-285MM
    • Interest expense: ~$50MM
    • 15 new hotel openings in 2011


  • Group bookings in the Q for the Q were up 15%
  • RevPAR was up 7% in constant dollars in their international hotels
  • Are making progress with 3rd party developers in urban US markets where they don't have a presence currently, despite the difficult development environment
  • Have 12 hotels under contract for development in India
  • Have Hyatt Places opening in Costa Rica, Hawaii and Amsterdam over the next 2 years
  • In NY, they accelerated their renovations and should finish a few weeks ahead of schedule.
  • Expect renovated hotels to have higher revenues vs. the comp set. These hotels are also in markets with limited supply and therefore should outperform over the next few years
  • Last year in 1Q2010 they benefited from an $8MM settlement of a dispute in their timeshare segment
  • Adjusted for the renovation impact, margins at owned hotels would have grown 60bps
  • NA management and franchising - full service
    • Timing of Easter negatively impacted them by 150bps on RevPAR
    • Group revenue was stronger as a result of stronger in the quarter for the quarter bookings.  There was also a 10% increase in in the quarter for the year bookings mainly due to rate increases
    • Shift of business mix continue to benefit rates
  • NA select service management and franchised:
    • Fees increased by 13%
  • International mgmt & franchise business
    • Asia Pacific continued to be strong
    • China RevPAR + 20%
    • 2010 benefited from the World Expo in Shanghai so comps are tough
    • Latin America comps were strong as well
    • Europe, ME & Africa was weaker
    • 1/3 of their increase in international fees (incentive fee line) was due to a $2MM termination fee received in the quarter
    • Expect fees to decline about 30% in 2011 for Japan and ME for the balance of the year
  • Adjusted SG&A would have increased 9% if not for the easy comps of last quarter which included some bad debt charges.  The increase was mainly due to higher compensation.
  • Expect renovations to impact EBITDA by $10-15MM (500bps of RevPAR impact) in 2Q and in 3Q the impact should be less than $5MM (100bps of RevPAR impact). Total impact of renovations will be 400bps to RevPAR and a little over $25MM EBITDA impact in the first 3 Q's of the year


  • The 15 hotel openings in the year is a gross number - they had 3 properties leave the system in this Q
  • Hyatt Minneapolis impact: $3MM EBITDA on an annualized basis
  • Focused on moderating their energy costs in India and also in the Middle East by making alternative and solar energy investments
  • Expect to also manage cost creep through food offerings and productivity gains
  • Have been focused on how they can apply their capital to get more development projects underway in the US. They are seeing a lot more opportunities now then they did a few quarters ago. They have done preferred equity, key money, equity, and loans to get the right opportunities in the US.  The construction lending marketing hasn't really improved.
  • Part of the benefit that they will see once renovations are complete is just a market weight factor - since the markets their hotels are in are performing well. The second part is due to getting higher RevPAR once the renovations are complete.
  • Group business grew 11% in the quarter.  A little over 80% of their business is booked for 2011, and rates being booked on 2012 are higher than rates on business booked for 2011.  They had 70% biz on the books at the end of last quarter. 
  • Expect that rate will be a major contributor to RevPAR growth in the future
  • Weather was a big factor in NY in the quarter, and therefore, RevPAR was weaker than most expected - including Hyatt.  They have had renovation disruption at their property. Their 2 Andaz properties are still ramping up too - so they don't have good comps.
  • Roughly 1/4 of the hotels in their pipeline have some sort of Hyatt capital behind it
  • Filed a shelf registration for 19.4MM shares on behalf of some Pritzer family shares - it's really their decision on what to do with those shares.
  • The reason that impact from renovations increased is because they are taking roughly 20% more rooms out in Q2, which is a seasonally strong quarter for them
  • Next phase of renovations? They do have some other renovations planned for the year - they will begin later this year but they don't expect them to have material disruption. It's about 4-5 properties - they are typical renovations - not as extensive as the 5 they outlined
  • They continue to pursue conversion opportunities but those opportunities are opportunistic - (Tulsa, Hawaii, Maldives)