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In preparation for HYATT's 2Q earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary

GOLDMAN SACHS LODGING, GAMING, RESTAURANT AND LEISURE CONFERENCE (JUNE 5), BAIRD GROWTH STOCK CONFERENCE (MAY 9)

  • "In North America, full service hotels where group business represents about 45% or 50% of our room revenue, our group pace for 2012 is currently up in the mid single-digit range with one-third of that increase due to increase in rate."
  • "Industry supply growth in North America is in and around the 1% level, which is a real plus for us as we move forward and given our owned asset base."
  • "We expect to open more than 20 hotels this year, including our first select service hotels outside of the US."
  • "The former LodgeWorks Hotels are doing very well, on track to exceed our original forecast and showing strong RevPAR and market share performance."
    • "LodgeWorks, we expected that we would generate roughly $40 million of EBITDA this year; we're on track to do that."
  • "From a hospitality perspective, upper tier hotels in Mexico City continue to perform well. The market RevPAR progression expected this year is about 10% and our hotel [Hyatt Regency Mexico City] is up over 20% RevPAR was year-over-year through April."
    • "With respect to Mexico City, we expect this year to earn somewhere between $8 million and $10 million in EBITDA from the property."
    • "We expect to improve operations in this hotel both from our branding of it, but also we're committing to spend about $40 million to complete a rooms renovation that is largely completed, but we're also adding meeting space and doing some repositioning of the food and beverage operations in the hotel. That will be spent over the next few years. So we expect the expansion of meeting space to allow us to shift some mix into group business and with a more proactive and integrated revenue management process, we expect to be able to significantly improve operations. So our outlook for earnings for this hotel is more than $25 million of annualized EBITDA upon stabilization."
    • "Most importantly, it's really consistent with our strategy of how we intend to use our balance sheet, which is to
      really secure opportunities in gateway cities, and eventually this hotel will – we will look to recycle it, and sell it,
      but retain the long-term management contract. But we really believe the repositioning of the hotel, the branding
      of it and some other work that we are going to do will have a positive impact."
  • "We have signed contracts for more than 170 hotels representing over 38,000 rooms. On a hotel basis it's about 37% of our hotel base. On a rooms basis it's about 30% of our room base. Over a third of those properties are under construction and about 80% of the contracts for these hotels and the pipeline require little or no capital from us. About 70% of them are outside of North America and about 50% of the total are in China and in India."
  • "We expect the increase in second quarter adjusted SG&A to be similar to the increase we saw in the first quarter, excluding the special items. For the full-year, we expect total adjusted SG&A to increase in the low teen's percentage range versus 2011."
    • "I would say that over time we expect by virtue of increasing fee base for the increase in SG&A as a proportion of the revenue base to actually flatten out over time, because the base of openings will increase our revenue base. So it's really difficult to peg it to a percentage of revenue."
  • [Park Hyatt New York] "It's under construction right now. It is on 57th Street opposite Carnegie Hall. That hotel, we have a fixed price purchase contract for that property. We're anticipating returns – cash-on-cash returns in the high single digit percentage range unlevered."
  • "HYATT House is a brand that we just re-launched; many of the LodgeWorks hotels that we acquired have been converted to HYATT House. So we have a lot of momentum on that side. Same thing with Hyatt Place; we have a lot of conversion activity, more urban penetration of Hyatt Place. So that's helping those brands, and then frankly, on the full-service side, given some of the mix issues I talked about, both the concentration of group business and Hyatt Regency being a big part of our full-service representation in North America, as group business continues to pick up, you should see increased market share growth there."
  • "Hotels in North America tend to be higher base fees relatively speaking, lower incentive fee contributions with higher hurdles; internationally, generally slightly lower in base fees, relatively speaking, with lower hurdles on the incentive fees and higher incentive fee potential. So I would say, roughly speaking, those generally have not changed even despite the fact that there's more competition in the space. The margins tend to still be quite good and it's a good business for us to be in."
  • [Renovation cycle] "We're at the very tail end of that cycle with regards to those large-scale renovations. We have one project, the Grand Hyatt in San Francisco, where we're finishing up the meeting space and some of the food and beverage space in the hotel and the lobby."

YOUTUBE FROM 1Q CONFERENCE CALL (MAY 3)

  • [Hyatt Regency Mexico City] "The hotel currently has roughly a 15% group mix, and we expect that to expand over time, both because of our revenue management, and our group base of business, but also because we're doing some reprogramming within the hotel."
    • It's clearly below peak [cycle]. But the comparability of that to the operation of the hotel under our management is really difficult to establish, especially in view of the fact that we do expect to change the mix of business in the hotel. We clearly expect that there will be a lift from the branding as well as the renovation, which we expect to execute over the next two-and a- half to three years."
  • "We completed the acquisition of a site in Rio and we continue to refine the design plans and the construction estimates for the project. So, at this point it's predevelopment costs that we are incurring to move the project along, which we will continue to do. We are looking forward in time to the Olympics in 2016, and ensuring that we put ourselves on a path to have the hotel open and ready for that prior to that. And, we will over time engage with potential partners and look to establish a partnership or JV of some kind in taking that project forward."
  • "In terms of the sectors, as I mentioned, is really consulting, technology and IT being strong. In terms of least strong, less strong, is really the pharma and the financial sector."
  • "I would say as I think about the bookings, for 2013 and 2014 continue to grow. 2013, I think we probably have about 45% of the business on our books. And 2014, we probably have 30% of the business on our books. And, rates are picking up, I mean, rates are up 2%, when you compare this for the bookings this time last year. So I think overall trends are looking decent."
  • [Andaz] "We have about half a dozen in the pipeline at this point, mostly outside of the U.S. and in some really attractive and important cities, both for the Andaz customer base but also for Hyatt overall. We are less than five years into the rollout of the brand post launch. I think the traction has been very good.  There's been a positive impact to the rest of the portfolio, as Gold Passport members are discovering Andaz. And so, it remains a significant brand in the dialog with developers that we are already doing business with, in China and India, and in other markets."
  • "I think New York has been good. I think the market's seeing mid-to-high single digit increases for us. We've got a newer product, whether it's the Andaz which are new or the recently renovated Grand Hyatt Hotel. So, we're seeing increases higher than that on our overall market basis."
  • "I wouldn't say that there's a fundamental shift at this point in terms of actual transaction volume increasing. We'll see how this evolves over the course of the year, the debt markets are not backing up for sure. But neither are they really expanding significantly or at a fast pace. We have seen some improvement in securing financing for some specific projects, but those projects have tended to be in great locations in key cities with great sponsorship. And I think that the – with those factors, financing seems to be more accessible now than it has been in the past.
    But again, I don't consider that a sea shift."
  • [Park Hyatt opening] "It looks like they are on track to complete late next year or early 2014 and we will establish an opening date a little later."
  • "The contracts that we have in some of the major cities, Chicago, San Francisco, Los Angeles, and Waikiki for example, expired in late 2009 and in one case early 2010. We've been in negotiations and dialog with the local unions in those cities since then. We have not been able to bring those negotiations to closure. There was a recent round of negotiations in both New York and in Washington. And those have progressed relatively more quickly. And the terms of the arrangements there are being finalized at this point. we have about 25% or 30% of our workforce in North America is unionized. So we remain highly focused on this."