In preparation for HYATT's FQ1 2012 earnings release Thursday morning, we’ve put together the recent pertinent forward looking company commentary.
JP MORGAN GAMING, LODGING, RESTAURANT & LEISURE MANAGEMENT CONFERENCE (March 19)
- "As we think forward, occupancies are close to peak levels. And with really limited supply especially in the U.S., we think rate could be a higher driver of RevPAR growth over time."
- "We feel good about select, which was largely only present in the U.S. We should have a few select hotels open in Latin America and India later this year."
- "As we think forward, our primary objective is to use the cash to grow the business. We don't have a dividend policy or any program relative to share buybacks at this point because we believe that over the next 12 to 18 months using the cash to grow the businesses is what's going to be the prime driver of capital deployment."
- "While it's our intended policy at this point where we don't pay dividends or share buybacks, we're going to take a look at that because... we don't necessarily need to run the company with a billion dollars of cash."
- "Our stated strategy is to recycle a lot of assets we own."
- "Year-over-year property taxes will be high largely because we got credits in 2011."
- "Q: If the full service urban Hyatt branded hotel experienced a mid-single digit RevPAR growth rate that was driven two-thirds by price, would you expect the flow through to be 50%, 60%?
- A: Yeah, I mean hypothetically speaking, I would say in that range.....the other thing you bear in mind is our food and beverage and other revenue, which tends to be higher outside the U.S. than inside."
- "New York has got some headwinds in the form of the financial sector, more anecdotically than what we're seeing in the business. But from our perspective, even if there is a bit of a speed bump in terms of the financial sector, the fact that we have an improved product in that market, we believe overtime we can continue to grow market share."
- "Largely in the sub-urban and secondary cities... that's where over time recycling out of the capital becomes important. We have been placing a lot of emphasis on the urban centers"
- [170 hotel pipeline] "It's a 60/40 skew in the full service/select. The full service takes three to five years. Select is two to four years depending on where it is. I'd say it's skewed towards international relative to North America....you can look at it over five years and this year we said we're going to open a little north of 20 hotels [excluding conversions and acquisitions]"
- "Our presence in Europe, despite being limited, is really focused around key markets. We are present in France... Germany... We've got some presence in the UK. But there are markets like Spain... where we don't have presence, and over time, our intent is to have hotels in Spain and other markets."
HYATT Q4 CONFERENCE CALL (February 16)
- "While the outlook for industry prospects seems to be improving over the last couple of months, there are still potential headwinds in the short-term from both Europe and a challenging financial services sector. As a frame of reference, roughly 10% of our overall adjusted EBITDA comes from continental Europe, including owned, leased and managed hotels."
- "While it's difficult to forecast transient business for 2012, we do know that rate increases on corporate negotiated volume accounts in North America are up as expected in the mid single-digit percentage range for 2012 versus 2011."
- "RevPAR growth in the quarter was negatively impacted by approximately 150 basis points due to
bathroom renovations at several Hyatt Place properties. These bathroom renovations will continue through 2012, but are likely to have a lower level of impact to RevPAR from quarter-to-quarter."
- "For 2012, we expect our effective tax rate to be in the low to mid 30% range before discrete items. Keep in mind that quarterly effective tax rates may be somewhat volatile due to the impact of discrete items. While discrete items by nature are very difficult to predict and can have either a positive or negative overall effect on the effective tax rate, we do not presently anticipate the impact to discrete items in 2012 to be at the same magnitude that we saw in 2011."
- "Our expectation for this year is approximately $350 million in capital expenditures... includes $65 million which was carried over and... approximately $250 million on maintenance capital expenditures and projects from which we expect to generate a return. This includes conversion or renovation cost for the hotels we've acquired from LodgeWorks, as well as the extended-stay hotels we acquired last May. And approximately $35 million on new investments and properties that will be developed by us or in conjunction with partners over the next few years."
- [Group bookings] "Our pace for 2012 is in the low-to-mid single-digits. We have 70% of the business we expect already booked at rates higher than where we end the year. Pace for 2013 and 2014 is also positive. We at this point have about 40% of the expected business for 2013 booked and about 25% of the business for 2014 booked at rates higher than what we're booking for 2012."
- "There's been a proclivity to push decision making closer to the date of the events, which is clearly reflected in the quarter-for-the-quarter production that we've seen over the course of our quarter production that we've seen over the course of our past year and that's kind of what we are taking into this coming year, which is a real focus on continuing to book in the quarter-for-the-quarter business."
- "The other thing that we're focused on that we've talked about in the past is more urban representation for select service. We have very, very little urban representation for our select-service brands. That's going to change this coming year as we start to open select-service properties that are under construction in some major cities."
- "On the Rio front, we have been actively engaged in a lot of work around design and securing all the various entitlements that we need to be able to proceed with the project... We're in discussions with a number of potential sources of financing both potential partners but also financial debt financing... Our current plan is to be able to complete that project well ahead of the Olympics, so that we are there and ready to serve those guests coming into the city."
- "We expect to be active on both the purchase and the sales side... As we look forward over the next couple of years, we do expect transactional activity to grow."
- "So, my outlook for New York long-term is very bullish. I recognize that there is more supply coming into New York than in most markets around the country."