Hyatt reports third quarter 2015 results

CHICAGO, IL – Hyatt Hotels Corporation today reported third quarter 2015 financial results.

Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “Our RevPAR growth was strong due to greater transient business and increased market share. These positive results drove solid fee growth across our system.”

Third quarter 2015 financial results are as follows:

• Adjusted EBITDA was $172 million in the third quarter of 2015 compared to $179 million in the third quarter of 2014, a decrease of 3.9%. Adjusted EBITDA in the third quarter of 2015 was negatively impacted by $17 million due to net dispositions and $7 million due to net unfavorable currency impacts, compared to the third quarter of 2014.

• Adjusted for special items, net income attributable to Hyatt was $42 million, or $0.30 per share, during the third quarter of 2015 compared to net income attributable to Hyatt of $30 million, or $0.20 per share, during the third quarter of 2014.

• Net income attributable to Hyatt was $25 million, or $0.18 per share, during the third quarter of 2015 compared to net income attributable to Hyatt of $32 million, or $0.21 per share, in the third quarter of 2014.

• Comparable owned and leased hotels RevPAR increased 2.5% (5.9% excluding the effect of currency) in the third quarter of 2015 compared to the third quarter of 2014.

• Comparable owned and leased hotels operating margins decreased 60 basis points in the third quarter of 2015 compared to the third quarter of 2014. Owned and leased hotels operating margins decreased 100 basis points in the third quarter of 2015 compared to the third quarter of 2014.

• Comparable systemwide RevPAR increased 1.6% (5.4% excluding the effect of currency) in the third quarter of 2015 compared to the third quarter of 2014.

• Comparable U.S. full service hotel RevPAR increased 5.2% in the third quarter of 2015 compared to the third quarter of 2014.
Comparable U.S. select service hotel RevPAR increased 7.1% in the third quarter of 2015 compared to the third quarter of 2014.

• Nine hotels were opened during the third quarter of 2015. As of September 30, 2015, the Company’s executed contract base consisted of approximately 260 hotels or approximately 56,000 rooms.

• The Company repurchased 3,735,460 shares of common stock at a weighted average price of $52.11 per share, for an aggregate purchase price of approximately $195 million.

Mr. Hoplamazian continued, “Adjusted EBITDA grew nearly 10% in the third quarter, excluding the impact of foreign exchange and dispositions of hotels last year. This level of growth is a testament to the strength of our business model and reflects strong ongoing performance in our existing hotels and the positive effects of significant net growth in our hotel and rooms base around the world.

“Year-to-date through the third quarter, we added 37 hotels to our system, 28% more than the same period last year, and expect to open approximately 13 more hotels by year-end. Our base of executed contracts for new hotels increased to approximately 260 hotels or 56,000 rooms in the third quarter, reflecting a significant potential increase relative to our existing size. We remain focused on opening new hotels across multiple geographies to expand our differentiated offering in new and attractive markets.

“Our growth profile is expected to yield greater management and franchise fees in the years ahead. Total fees grew nearly 12% year-to-date through the third quarter, or 16% excluding the impact of foreign exchange. We expect this strong fee growth profile to progress as we continue to realize meaningful net hotel and net rooms growth.

“Looking ahead, we expect overall operating performance at our hotels in the U.S. to remain strong, based on continued economic growth and positive group and transient trends.”

Owned and Leased Hotels Segment

Total segment Adjusted EBITDA decreased 10.6% in the third quarter of 2015 compared to the same period in 2014.

Owned and leased hotels Adjusted EBITDA decreased 14.4% in the third quarter of 2015 compared to the same period in 2014. Refer to the table on page 18 of the schedules for a detailed list of portfolio changes and the year-over-year net impact to third quarter owned and leased hotels Adjusted EBITDA.

Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA increased 10.5% in the third quarter of 2015 compared to the same period in 2014.

Revenue decreased 9.9% in the third quarter of 2015 compared to the same period in 2014. Owned and leased hotels expenses decreased 8.8% in the third quarter of 2015 compared to the same period in 2014.

RevPAR for comparable owned and leased hotels increased 2.5% (5.9% excluding the effect of currency) in the third quarter of 2015 compared to the same period in 2014. Occupancy increased 100 basis points and ADR increased 1.2% (4.6% excluding the effect of currency) compared to the same period in 2014.

Comparable owned and leased hotels revenue increased 1.8% in the third quarter of 2015 compared to the same period in 2014. Excluding expenses related to benefit programs funded through rabbi trusts and non-comparable hotel expenses, expenses increased 2.6% in the third quarter of 2015 compared to the same period in 2014. Refer to the table on page 12 of the schedules for a reconciliation of comparable owned and leased hotels expenses to owned and leased hotels expenses.

Management and Franchise Fees

Total fee revenue increased 9.6% (13.8% excluding the effect of currency) to $103 million in the third quarter of 2015 compared to the same period in 2014. Base management fees increased 4.4% to $47 million in the third quarter of 2015 compared to the same period in 2014. Incentive management fees decreased 8.0% to $23 million in the third quarter of 2015 compared to the same period in 2014, primarily due to unfavorable foreign exchange translation. Franchise fees increased 33.3% to $24 million in the third quarter of 2015 compared to the same period in 2014, primarily due to new hotels and hotels recently converted from managed to franchised. Other fee revenues increased 50.0% to $9 million in the third quarter of 2015 compared to the same period in 2014 as a result of increased amortization of deferred gains from hotels sold subject to long-term management agreements and termination fees.

Americas Management and Franchising Segment

Adjusted EBITDA increased 12.1% in the third quarter of 2015 compared to the same period in 2014.

RevPAR for comparable Americas full service hotels increased 4.0% (5.3% excluding the effect of currency) in the third quarter of 2015 compared to the same period in 2014. Occupancy increased 50 basis points and ADR increased 3.2% (4.5% excluding the effect of currency) compared to the same period in 2014.

Group rooms revenue at comparable U.S. full service hotels increased 1.4% in the third quarter of 2015 compared to the same period in 2014. Group room nights decreased 3.2% and group ADR increased 4.7% in the third quarter of 2015 compared to the same period in 2014.

Transient rooms revenue at comparable U.S. full service hotels increased 9.2% in the third quarter of 2015 compared to the same period in 2014. Transient room nights increased 4.6% and transient ADR increased 4.4% in the third quarter of 2015 compared to the same period in 2014.

RevPAR for comparable Americas select service hotels increased 7.2% in the third quarter of 2015 compared to the same period in 2014. Occupancy increased 170 basis points and ADR increased 5.0% compared to the same period in 2014.

Revenue from management, franchise and other fees increased 6.3% in the third quarter of 2015 compared to the same period in 2014.

The following six hotels were added to the portfolio during the third quarter:

• Hyatt Place Bloomington / Normal (franchised, 114 rooms)
• Hyatt Place Buffalo / Amherst (franchised, 137 rooms)
• Hyatt Place Charleston / Historic District (managed, 191 rooms)
• Hyatt Place Tegucigalpa, Honduras (franchised, 126 rooms)
• Hyatt House Atlanta / Downtown (franchised, 150 rooms)
• Hyatt House Charleston / Historic District (managed, 113 rooms)

One hotel was removed from the portfolio during the third quarter.

Southeast Asia, China, Australia, South Korea and Japan (ASPAC) Management and Franchising Segment

Adjusted EBITDA increased 33.3% in the third quarter of 2015 compared to the same period in 2014.

RevPAR for comparable ASPAC full service hotels decreased 5.6% (increased 3.1% excluding the effect of currency) in the third quarter of 2015 compared to the same period in 2014. Occupancy increased 230 basis points and ADR decreased 8.6% (0.2% excluding the effect of currency) compared to the same period in 2014.

Revenue from management, franchise and other fees decreased 4.5% in the third quarter of 2015 compared to the same period in 2014.

The following two hotels were added to the portfolio during the third quarter:

• Hyatt Regency Naha, Okinawa, Japan (franchised, 294 rooms)
• Hyatt Regency Wuhan Optics Valley, China (managed, 330 rooms)

Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management Segment

Adjusted EBITDA decreased 22.2% in the third quarter of 2015 compared to the same period in 2014.

RevPAR for comparable EAME/SW Asia full service hotels decreased 7.5% (increased 6.2% excluding the effect of currency) in the third quarter of 2015 compared to the same period in 2014. Occupancy increased 200 basis points and ADR decreased 10.3% (increased 2.9% excluding the effect of currency) compared to the same period in 2014.

Revenue from management and other fees decreased 11.1% in the third quarter of 2015 compared to the same period in 2014, primarily due to the impact from the stronger U.S. dollar and decreased performance at certain properties in the Middle East.

The following hotel was added to the portfolio during the third quarter:

• Hyatt Place Dubai Baniyas Square, United Arab Emirates (managed, 126 rooms)

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses decreased 29.9% in the third quarter of 2015 compared to the same period in 2014. Adjusted selling, general, and administrative expenses decreased 16.5% in the third quarter of 2015 compared to the same period in 2014, primarily due to the sale of the Company’s vacation ownership business and lower stock-based compensation expenses in the quarter. Refer to the table on page 11 of the schedules for a reconciliation of adjusted selling, general, and administrative expenses to selling, general, and administrative expenses.

OPENINGS AND FUTURE EXPANSION

Nine hotels were added in the third quarter of 2015, each of which is listed above. The Company added 37 hotels year-to-date through September 30, 2015 and is on pace to open approximately 50 hotels during the 2015 fiscal year.

As of September 30, 2015, the Company had executed management or franchise contracts for approximately 260 hotels (or approximately 56,000 rooms). The executed contracts represent potential entry into several new countries and expansion into new markets or markets in which the Company is under-represented.