Strong Leisure Demand Drives Positive Momentum; 6.5% Net Rooms Growth
CHICAGO (May 4, 2021) - #hyatthotels Corporation ("Hyatt" or the "Company") (NYSE: H) today reported first-quarter 2021 financial results. Net loss attributable to Hyatt was $304 million, or $2.99 per diluted share, in the first quarter of 2021, compared to net loss attributable to Hyatt of $103 million, or $1.02 per diluted share, in the first quarter of 2020. Adjusted net loss attributable to Hyatt was $363 million, or $3.57 per diluted share, in the first quarter of 2021, compared to Adjusted net loss attributable to Hyatt of $35 million, or $0.35 per diluted share, in the first quarter of 2020. Refer to the table on page 11 of the schedules for a summary of special items impacting Adjusted net loss and Adjusted losses per diluted share for the three months ended March 31, 2021 and March 31, 2020.
Mark S. Hoplamazian, president and chief executive officer of #hyatthotels Corporation, said, "First quarter results exceeded expectations as demand improved meaningfully over the course of the quarter. The expansion of vaccine distribution and the easing of #Travel restrictions in certain markets fueled improved confidence in #Travel in many of the markets in which we operate. We also reported strong net rooms growth of 6.5%, reaching an important milestone with the opening of our 1,000th hotel in the quarter."
First quarter of 2021 highlights are as follows:
Mr. Hoplamazian continued, "While risks do remain in the #management of the pandemic, we are optimistic about continued growth of demand in the coming months and the balance of 2021. The demand levels we saw in March have continued through April. While leisure #Travel continues to lead the recovery, we are encouraged by positive indicators across other #Travel segments as well."
OPERATIONAL UPDATE
Comparable system-wide RevPAR and comparable owned and leased #hotel RevPAR improved in the first quarter of 2021 compared to the fourth quarter of 2020. The pace of recovery varied by region and was favorably impacted by the easing of #Travel restrictions in certain markets and strengthening demand for leisure-oriented destinations. Consistent with trends in each of the last two quarters, the recovery was led by relative strength in Greater China and United States select service hotels. Additionally, certain resort hotels experienced a notable sequential improvement in demand.
Comparable system-wide RevPAR strengthened through the first quarter, increasing over 50% from January to March 2021, and reaching the highest level since the onset of the COVID-19 pandemic. Results were driven by strong leisure transient demand, particularly on weekends and holidays. Group and business transient demand also gained momentum through the quarter, but at a more modest pace. The Company's overall Adjusted EBITDA for March 2021 was positive.
As of March 31, 2021, 96% of total system-wide hotels (94% of rooms) were open.
FIRST QUARTER RESULTS
First quarter of 2021 financial results as compared to the first quarter of 2020 are as follows:
Management, Franchise and Other Fees
Total #management and franchise fee revenues decreased 40.6% (40.7% decrease in constant currency) to $49 million, reflecting a sequential improvement from $47 million reported in the fourth quarter of 2020. Base #management fees decreased 48.8% to $24 million, incentive #management fees increased 2.2% to $8 million, and franchise fees decreased 38.0% to $17 million during the quarter. Other fee revenues decreased 46.7% to $14 million.
Americas #management and Franchising Segment
Americas #management and franchising segment Adjusted EBITDA decreased 59.3% (59.2% decrease in constant currency) to $28 million, reflecting a sequential improvement over the three months of the quarter and lapping the impact of the COVID-19 pandemic that began in March of 2020. At March 31, 2021, 93% of Hyatt's Americas full service hotels (92% of rooms) and 99% of Americas select service hotels (99% of rooms) were open.
Americas net rooms increased 5.2% compared to the first quarter of 2020.
Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia (ASPAC) #management and Franchising Segment
ASPAC #management and franchising segment Adjusted EBITDA decreased 39.7% (40.8% decrease in constant currency) to $5 million. Results across the region were led by Greater China. At March 31, 2021, 97% of Hyatt's ASPAC full and select service hotels (96% of rooms) were open.
ASPAC net rooms increased 13.6% compared to the first quarter of 2020.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) #management and Franchising Segment
EAME/SW Asia #management and franchising segment Adjusted EBITDA decreased 102.5% (103.8% decrease in constant currency), reflecting the impact of the COVID-19 pandemic and #Travel restrictions across parts of the region. At March 31, 2021, 89% of Hyatt's EAME/SW Asia full and select service hotels (89% of rooms) were open.
EAME/SW Asia net rooms increased 3.3% compared to the first quarter of 2020.
Owned and Leased Hotels Segment
Total owned and leased hotels segment Adjusted EBITDA decreased 183.5% (184.7% decrease in constant currency) to $(29) million. Owned and leased hotels segment results were heavily impacted by the COVID-19 pandemic, but improved meaningfully over the three months of the quarter driven by stronger demand. Refer to the table on page 9 of the schedules for a detailed list of portfolio changes and the year-over-year net impact to total owned and leased hotels segment Adjusted EBITDA. At March 31, 2021, 85% of Hyatt's owned and leased hotels (83% of rooms) were open.
Corporate and Other
Corporate and other Adjusted EBITDA increased 13.3% (13.7% increase in constant currency) to $(24) million, reflecting a $3 million improvement as compared to the first quarter of 2020. This increase was primarily due to cost containment initiatives that reduced expenses, predominantly payroll and related costs.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses increased 102.0%, inclusive of rabbi trust impact and stock-based compensation. Adjusted selling, general, and administrative expenses decreased 22.5%, or $16 million, as a result of cost containment initiatives that drove decreases in payroll and related costs. Refer to the table on page 12 of the schedules for a reconciliation of selling, general, and administrative expenses to Adjusted selling, general, and administrative expenses.
Income Taxes
Net loss in the quarter included a $193 million non-cash full valuation allowance on U.S. deferred income tax assets. This valuation allowance was based on an accounting assessment, as required by U.S. GAAP, which places significant weight on the Company's recent pre-tax book losses resulting from the impact of COVID-19 on our business. This valuation allowance does not impact cash flows, and does not limit the ability to benefit from current period losses and deferred tax assets on future tax filings.
The Company filed a 2020 U.S. tax refund claim in the quarter and expects to receive a tax refund of approximately $250 million in the second half of 2021 in connection with 2020 net operating losses carried back to prior years under the CARES Act.
Further information in the press release to download
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