• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

In preparation for the Hyatt's Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from Hyatt’s Q1 earnings call and subsequent conferences/releases.

Post Call Commentary / Material news

July 14: Acquisition of Lodgeworks

  • “Signed an agreement to purchase a portfolio of assets from Lodgeworks, LP, a private hotel development, ownership and management company, and its private equity partners. The acquisition includes 24 hotels and related assets, including management, franchise and intellectual property rights for an aggregate purchase price of approximately $802 million in cash. Key members of the LodgeWorks management and development team are expected to join Hyatt as part of the transaction.”
  • “The acquisition will enable the company to introduce Hyatt-branded hotels in nine markets where it currently is not represented at all and to establish its extended stay presence in 16 new markets.”
  • “Following the transaction, 16 Hotel Sierra hotels will be branded as Hyatt Summerfield Suites, increasing the number of hotels in that portfolio from 38 to 54. Five properties, including the AVIA Hotels, are expected to be converted to full service Hyatt brands. The brand affiliations of Hyatt Summerfield Suites and Hyatt Place properties in the LodgeWorks portfolio will remain unchanged”
  • “Hyatt does not expect a significant benefit to 2011 full-year Adjusted EBITDA as result of this purchase, due to the expected timing of the closings, transaction costs, and the fact that several of the assets are continuing to ramp up post-opening. However, Hyatt expects this purchase to generate approximately $50 million of Adjusted EBITDA during 2012.”
  • Upon expected closing in 3Q11, hotels will be managed by Hyatt

May 18: Purchase of 3 California Woodfin Suites Properties

  • “Hyatt … purchased three Woodfin Suites hotels in California for $76.5 million from the beneficial owner O-B Holdings.  Today Hyatt affiliates began managing the three properties, which are being rebranded as Hyatt Summerfield Suites hotels… Future property renovations totalling approximately $15 million are planned.”
  • The 3 hotels will add 570 select service rooms to Hyatt’s portfolio.

May 16: Repurchase 8,987,695 Shares of Class B Common Stock

  • “Hyatt has agreed to repurchase 8,987,695 shares of Class B common stock for $44.03 per share… on May 13, 2011, for an aggregate purchase price of $395,728,211… thereby reducing the total number of shares of common stock outstanding to 165,017,711 and reducing the number of shares of Class B common stock outstanding to 120,478,305.”

June 1: Sanford C. Bernstein & Co. Strategic Decisions Conference

  • “We’re really focused on expanding our presence in gateway cities around the world. That’s our number one area of focus”
  • “Our group business in North America represents somewhere between 45% and 50% of our revenue base among our North American full-service hotels. We participated in the recapitalization and redevelopment of the Hyatt Regency New Orleans, a very large convention hotel, that remained sort of a lasting impression of Katrina, the hurricane”
  • The other major area of focus for us…would be select service properties…We recently purchased another brand; Woodfin”.

Youtube from Q1 Conference Call

  • Adjusting for the renovations this year, and the settlement amount from last year, we estimate that adjusted EBITDA would have grown by approximately 14%.”
  • “RevPAR results were negatively impacted by the displacement of revenue of approximately 400 basis points due to renovations. Margins were negatively impacted by approximately 190 basis points due to renovation activity at owned hotels. As a result, margins would actually have grown about 60 basis points adjusting for the estimated impact of the renovations. The renovations adversely impacted owned and leased adjusted EBITDA by about $10 million in the quarter”
  • Group revenue, booked in the quarter for the quarter, was up 15%...Group revenue, booked in the quarter for the year, was up over 10%...Most of this 10% increase is as a result of higher rates.”
  • “As for transient business in the quarter, revenues increased 6%...mainly due to rates, which increased almost 5% versus last year. Shifts in mix of business continue to drive rate increases. Corporate rates from top accounts were up in the mid-single-digit percentage range consistent with our expectations following corporate rate negotiations that wrapped up in the first quarter.”
  • “Overall, international fees increased 12.9% in the first quarter of 2010, excluding the impact of currency. About a third of this increase was due to a termination fee received in the first quarter, and the remaining increase a result of higher revenues, and the continued ramp up of hotels added in prior periods…The termination fee was in the incentive fee line in the P&L.  It was largely a hotel outside North America that we terminated, and the impact of that is under $2 million.”
  • “We have eight hotels in Japan and two hotels in Egypt…Based on our current estimates, we expect fees from these two areas to decline approximately 30% or less than $5 million for full-year 2011, compared to last year”
  • “Our adjusted SG&A expenses increased 1.5% in the first quarter. Our comparison was relatively easy as we incurred higher bad debt expense in 2010. Without this favorable comparison, adjusted SG&A would have increased approximately 9%. This increase mostly reflects higher compensation costs.”
  • “As the level of disruption will be slightly higher in the second quarter than it was in the first, specifically we expect the renovations to have an approximate 500 basis point impact to RevPAR. And between $11 million to $13 million impact to our overall adjusted EBITDA in the second quarter. In the third quarter, we expect the renovations to have an approximate 100 basis point impact to RevPAR and an impact to adjusted EBITDA of less than $5 million. Thus in total, our expectation for renovation disruption is slightly higher than what we had discussed on the last earnings call, or approximately 400 basis points to owned and leased RevPAR and slightly over $25 million of adjusted EBITDA over the first three quarters of 2011.”
  • “We have contributed the Minneapolis property to a joint venture, but the impact on EBITDA is expected to be approximately $3 million on an annualized basis.”