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

Post Earnings Call Conference Commentary  (June 7th)

  • “Approximately 70% of our rooms are in North America with 30% in International. Internationally, we have a significant and strong presence in Asia - Pacific where 15% of our rooms are located…less than 10% of our rooms are in Europe.”
  • “We reduced approximately $170 million of costs out of comparable owned hotels during 2009 and are focused on limiting cost creep as occupancies increase.”
  • “We plan selectively and opportunistically recycle assets in order to achieve our goal of driving brand preference.”
  • “Over the last 12 to 18 months, like most of the folks in the industry, we had tides of expenses largely come in the form of staffing reductions, at the hotel level as well as the management level. For example, we did restructure our overhead structure… Last year we froze salaries, we gave no merit increases, bonuses, etc cetera. As things come back, it’s going to be tough maintaining those structures. We will have wage inflation and it is our intention that over time because we’re providing authentic hospitality and get satisfaction, we don’t comprise those standards as the business recovers. I think what you’re going to see is a tight overhead structure, both at the hotel and structured overhead – in terms of actual operating expenses in the hotel, it’ll probably attract an increase in occupancy over time.”
  • “We announced plans to renovate 5 properties this year. The 2 big ones were the Grand Hyatt New York and the Grand Hyatt San Francisco…the spend is over 2 years.”
  • “Our total CapEx program this year is anywhere between $270 and $290 million. But if you look at our portfolio, we have 102 assets, 55 of them are select assets, basically Hyatt Place and Hyatt Summerfield Suites. When we acquired Marriott Suites couple of years ago, we spent a couple of years actually recreating or creating the Hyatt Place brand. So the select portfolio is largely fresh."

1Q2010 YouTUBE

  • “In North America we saw an improvement in the volume of group bookings made during the first quarter as compared to what had been booked in the first quarter of 2009, while room rates remained under pressure.”
  • “During our year-end 2009 earnings call, we stated that transient demand has started to come back, and we are happy to say this trend continued through the first quarter across all three business segments i.e. owned and leased hotels, North American managed and franchise operations, and international managed and franchise operations. Revenues from transient customers, both corporate and leisure, were up for the first quarter of 2010, compared to the first quarter of 2009.”
  • “On the group side, while revenues were down in North America as compared to the first quarter of 2009, the number of group nights sold increased by approximately 3% compared to the first quarter last year.”
  • “Over a third of the 9% (Owned/leased RevPAR) increase was driven by our international owned hotels. Results in North America were helped by the ramp-up in the performance of two hotels that were renovated 12 to 18 months ago. Results were also helped by the Olympics that benefited our property in Vancouver.”
    • “Grand Cypress, which was under renovation last year, has opened and is ramping up. We had a Hyatt at West Hollywood that we converted to an Andaz, about a little over 12 months ago, and that has ramped up nicely during the last 12 months. And then the Olympics helped us in Vancouver.”
    • “The Andaz Hotel in West Hollywood opened in January of last year, so we had no rooms out during the course of the year there. And the rooms renovation at Grand Cypress was more in the first half of the year than in the second half of the year.”
  • “Comparable owned and leased hotel margins…benefited from the two hotels ramping up from renovations that I’ve mentioned as well as our property in Vancouver. Margin improvements at these three hotels represented almost half of the 220 basis-point decrease in the quarter.”
  • “We were able to manage expense increases to approximately 5.6% even as occupancy increased by 760 basis points. However, despite focus on operating efficiently, we expect that our costs will continue to increase, driven by inflationary pressures.”
  • [North America managed and franchised hotels] First quarter comparable RevPAR for full-service hotels declined 2.2%, driven by ADR, which declined 7.9%. The number of transient room nights sold increased approximately 9% where transient rates declined slightly over 7% in the first quarter of 2010.” 
  • "While the volume of group room nights sold increased during the quarter, overall group revenues declined in the mid-single digit percentage range due to declines in average rates. Group revenue paid for 2010, as of the end in the first quarter, was down from last year, but the rate of decline of group-paid lessened over the first quarter 2010.... Group cancellations declined materially and are at pre-downturn levels.”
  • [International management franchise business] “Few special factors helped our results in the quarter, such as a lift in business in Shanghai, due to the advanced planning for the World Expo, which opened earlier this week. Overall, international fees increased 16.7% in the first quarter of 2010, excluding the impact of currency, due to higher revenues at comparable hotels and increased fees from recently opened hotels.”
  • “We are experiencing ongoing SG&A expense growth due to higher compensation costs as we restore merit increases and incur higher travel costs as the people get back on the road.”
  • “On income taxes, we are expecting that the tax rate of our U.S. income to be approximately 38%, the blended tax rate on our international income to be approximately 20%, and certain fixed charges that could be slightly higher than 2009 levels.”
  • We expected the disruption associated with these projects to reduce rooms available for sale by an average of 400 per night from July through the end of 2010.”