CHICAGO (February 17, 2011) – Hyatt Hotels
Corporation (“Hyatt” or the “Company”) (NYSE: H) today reported
financial results for the fourth quarter 2010 as follows:
FOURTH QUARTER 2010
- Adjusted EBITDA was $118 million compared to
$104 million in the fourth quarter of 2009, an increase of 13.5%.
- Net income attributable to Hyatt was $6
million, or $0.03 per share, compared to net loss attributable to Hyatt
of $12 million, or $0.07 per share, in the fourth quarter of 2009.
Adjusted for special items, net income attributable to Hyatt was $12
million, or $0.07 per share, during the fourth quarter of 2010 compared
to net income attributable to Hyatt of $1 million, which resulted in a
negligible per-share impact, during the fourth quarter of 2009. See the
table on page 3 of the accompanying schedules for a summary of special
items.
- Comparable owned and leased hotels RevPAR
increased 4.1% (4.4% excluding the effect of currency) compared to the
fourth quarter of 2009.
- Owned and leased hotel operating margins
increased 170 basis points compared to the fourth quarter of 2009.
Comparable owned and leased hotel operating margins increased 210 basis
points compared to the same period in 2009. See the table on page 9 of
the accompanying schedules for a reconciliation of comparable owned and
leased hotel operating margins to owned and leased hotel operating
margins.
- Comparable North American full-service RevPAR
increased 3.9% (3.8% excluding the effect of currency) compared to the
fourth quarter of 2009. Comparable North American select-service RevPAR
increased 9.5% compared to the fourth quarter of 2009.
- Comparable International RevPAR increased 11.7%
(9.2% excluding the effect of currency) compared to the fourth quarter
of 2009.
- The Company opened six properties during the
fourth quarter of 2010.
Mark S. Hoplamazian, president and chief executive
officer of Hyatt Hotels Corporation, said, “In the fourth quarter, we
saw solid growth in demand and RevPAR, especially in our international
and select-service properties. Continued focus on flow through led to
significant operating margin improvement at our owned hotels.”
“In 2010 we achieved improvements in key drivers
of brand value -- namely associate engagement, customer satisfaction,
and our Gold Passport program, which demonstrates our loyalty to our
best customers. We also expanded our ability to serve more of our
guests when they travel as we opened over 30 hotels across all brands
and expanded the number of executed contracts for future hotels.
Looking ahead, we continue to focus on our key strategies and goals,
reinvest in our hotels, and pursue many opportunities for expansion
with existing and new owners. We are focused on creating value over the
long-term and are excited about our prospects around the world.”
FOURTH QUARTER 2010 SEGMENT RESULTS & OTHER
ITEMS
Owned and Leased Hotels Segment
Adjusted EBITDA increased 17.6% in the fourth
quarter of 2010 compared to the same period in 2009.
RevPAR for comparable owned and leased hotels
increased 4.1% (4.4% excluding the effect of currency) in the fourth
quarter of 2010 compared to the same period in 2009. Occupancy improved
160 basis points, and ADR increased 1.6% (1.8% excluding the effect of
currency).
Due to the renovations at five properties during
the fourth quarter of 2010, RevPAR for comparable owned and leased
hotels was estimated to have been negatively impacted by approximately
400 basis points. This estimate was based upon a RevPAR assumption for
each respective market.
Revenues increased 0.4% (0.6% excluding the effect
of currency) in the fourth quarter of 2010 compared to the same period
in 2009. Comparable hotel revenues increased 4.1% (4.3% excluding the
effect of currency) largely due to increased occupancy in the fourth
quarter of 2010 compared to the same period in 2009.
Owned and leased expenses decreased 1.6% in the
fourth quarter of 2010 compared to the same period in 2009. Excluding
expenses related to benefit programs funded through Rabbi Trusts and
non-comparable hotel expenses, expenses increased 1.4% in the fourth
quarter of 2010 compared to the same period in 2009. See the table on
page 9 of the accompanying schedules for a reconciliation of comparable
owned and leased hotels expense to owned and leased hotels expense.
Four hotels were removed from the owned and leased
portfolio as follows:
- Sold three Chicago-area properties (Hyatt
Lisle, Hyatt Deerfield, and Hyatt Rosemont) for $51 million and entered
into a franchise agreement for each property.
- Sold Grand Hyatt Tampa Bay for $59 million. The
Company continues to manage the property.
North American Management and Franchising
Segment
Adjusted EBITDA increased by 33.3% in the fourth
quarter of 2010 compared to the same period in 2009.
RevPAR for comparable North American full-service
hotels increased 3.9% (3.8% excluding the effect of currency) in the
fourth quarter of 2010 compared to the same period in 2009. Occupancy
increased 80 basis points and ADR increased 2.6% (2.5% excluding the
effect of currency).
RevPAR for comparable North American
select-service hotels increased 9.5% in the fourth quarter of 2010
compared to the same period in 2009. Occupancy increased 590 basis
points and ADR increased by 0.3%.
Revenue from management, franchise, and other fees
increased 4.3% in the fourth quarter of 2010 compared to the same
period in 2009.
The following properties were added to the
portfolio during the fourth quarter of 2010:
- Hyatt Place Des Moines/Downtown (franchised, 95
rooms)
- Hyatt Place Pittsburgh-North Shore (franchised,
178 rooms)
- Hyatt Place Houston/Sugar Land (managed, 214
rooms)
- Hyatt Escala Lodge at Park City (managed, 153
rooms)
International Management and Franchising
Segment
Adjusted EBITDA increased by 3.8% in the fourth
quarter of 2010 compared to the same period in 2009 as a result of
increased fee revenue.
RevPAR for comparable international hotels
increased 11.7% (9.2% excluding the effect of currency) in the fourth
quarter of 2010 compared to the same period in 2009. Occupancy
increased 300 basis points and ADR increased 7.0% (4.6% excluding the
effect of currency).
Revenue from management, franchise and other fees
increased 9.8% in the fourth quarter of 2010 compared to the same
period in 2009.
The following properties were added to the
portfolio during the fourth quarter of 2010:
- Hyatt Regency Dusseldorf, Germany (managed, 303
rooms)
- Hyatt Regency Pune, India (managed, 219 rooms)
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses
increased by 11.0% in the fourth quarter of 2010 compared to the same
period in 2009. Adjusted selling, general, and administrative expenses
increased by 10.3% in the fourth quarter of 2010 compared to the same
period in 2009 due to higher incentive compensation and higher staffing
levels. See the table on page 8 of the accompanying schedules for a
reconciliation of adjusted selling, general, and administrative
expenses to selling, general and administrative expenses.
OPENINGS AND FUTURE EXPANSION
Hyatt opened six properties in the fourth quarter
of 2010. During the full-year 2010, the Company opened 31 properties.
The Company expects to open a significant number
of new properties in the future. As of December 31, 2010, this effort
was underscored by executed management or franchise contracts for
approximately 140 hotels (or more than 32,000 rooms) across all brands.
The executed contracts represent potential entry into several new
countries and expansion into many new markets in which the Company is
under-represented. Approximately 70% of the projected new hotels are
located outside North America.
CAPITAL EXPENDITURES
Capital expenditures during the fourth quarter of
2010 totaled $160 million, including $68 million for investment in new
properties, including land held for future development.
Full-year 2010 capital expenditures totaled $310
million, including $107 million for investment in new properties,
including land held for future development.
CORPORATE FINANCE
During the fourth quarter of 2010, the Company:
- Sold four properties, as noted above (Hyatt
Lisle, Hyatt Deerfield, Hyatt Rosemont and Grand Hyatt Tampa Bay) for
$110 million.
On December 31, 2010, the Company had total debt
of $771 million, cash and cash equivalents including investments in
highly-rated money market funds and similar investments of
approximately $1.1 billion, short-term investments of $524 million and
undrawn borrowing availability of approximately $1.1 billion under its
revolving credit facility.
2011 INFORMATION
The Company is providing the following information
for the 2011 fiscal year:
- Capital expenditures are expected to be in the
range of $380 to $400 million, inclusive of significant renovation
projects at five owned properties. The Company expects that
displacement due to renovations will negatively impact the owned and
leased segment through the third quarter of 2011.
- Depreciation and amortization expense is
expected to be in the range of $280 to $290 million.
- Interest expense is expected to be
approximately $50 million.
CONFERENCE CALL INFORMATION
The Company will hold an investor conference call
today, February 17, 2011, at 10:00 a.m. CT. All interested persons may
listen to a simultaneous webcast of the conference call, which may be
accessed through the Company's website at http://www.hyatt.com and selecting
the Investor Relations link located at the bottom of the page, or by
dialing 617-213-8052, passcode #24193831, approximately 10 minutes
before the scheduled start time. For those unable to listen to the live
broadcast, a replay will be available from 1:00 p.m. CT on February 17,
2011 through midnight on February 24, 2011 by dialing 617-801-6888,
passcode #92641319. Additionally, an archive of the webcast will be
available on the Investor Relations website for approximately 90 days.
DEFINITIONS
Adjusted EBITDA
We use the term Adjusted EBITDA throughout this
earnings release. Adjusted EBITDA, as we define it, is a non-GAAP
measure. We define consolidated Adjusted EBITDA as net income (loss)
attributable to Hyatt Hotels Corporation plus our pro-rata share of
unconsolidated hospitality ventures Adjusted EBITDA based on our
ownership percentage of each venture, adjusted to exclude the following
items:
- equity earnings (losses) from unconsolidated
hospitality ventures;
- gains on sales of real estate;
- asset impairments;
- a 2008 charge resulting from the termination of
our supplemental executive defined benefit plans;
- other income (loss), net;
- discontinued operations and changes in
accounting principles, net of tax;
- net loss (income) attributable to
noncontrolling interests;
- depreciation and amortization;
- interest expense; and
- (provision) benefit for income taxes.
We calculate consolidated Adjusted EBITDA by
adding the Adjusted EBITDA of each of our reportable segments to
corporate and other Adjusted EBITDA.
Our board of directors and executive management
team focus on Adjusted EBITDA as a key performance and compensation
measure both on a segment and on a consolidated basis. Adjusted EBITDA
assists us in comparing our performance over various reporting periods
on a consistent basis because it removes from our operating results the
impact of items that do not reflect our core operating performance both
on a segment and on a consolidated basis. Our President and Chief
Executive Officer, who is our chief operating decision maker, also
evaluates the performance of each of our reportable segments and
determines how to allocate resources to those segments, in significant
part, by assessing the Adjusted EBITDA of each segment. In addition,
the compensation committee of our board of directors determines the
annual variable compensation for certain members of our management
based in part on consolidated Adjusted EBITDA, segment Adjusted EBITDA
or some combination of both.
We believe Adjusted EBITDA is useful to investors
because it provides investors the same information that we use
internally for purposes of assessing our operating performance and
making compensation decisions.
Adjusted EBITDA is not a substitute for net income
(loss) attributable to Hyatt Hotels Corporation, income (loss) from
continuing operations, cash flows from operating activities or any
other measure prescribed by GAAP. There are limitations to using
non-GAAP measures such as Adjusted EBITDA. Although we believe that
Adjusted EBITDA can make an evaluation of our operating performance
more consistent because it removes items that do not reflect our core
operations, other companies in our industry may define Adjusted EBITDA
differently than we do. As a result, it may be difficult to use
Adjusted EBITDA or similarly named non-GAAP measures that other
companies may use to compare the performance of those companies to our
performance. Because of these limitations, Adjusted EBITDA should not
be considered as a measure of the income generated by our business or
discretionary cash available to us to invest in the growth of our
business. Our management compensates for these limitations by reference
to our GAAP results and using Adjusted EBITDA supplementally.
Adjusted Selling, General and Administrative
Expense
Adjusted selling, general and administrative
expenses exclude the impact of expenses related to benefit programs
funded through Rabbi Trusts in addition to expenses resulting from the
termination of supplemental executive defined benefit plans.
Comparable Owned and Leased Hotel Operating
Margin
We define Comparable Owned and Leased Hotel
Operating Margin as the difference between comparable owned and leased
hotels revenue and comparable owned and leased hotels expenses.
Comparable owned and leased hotels revenue is calculated by removing
noncomparable hotels revenue from owned and leased hotels revenue as
reported in our consolidated statements of income (loss). Comparable
owned and leased hotel expenses is calculated by removing both
noncomparable hotels expenses and the impact of expenses funded through
Rabbi Trusts from owned and leased hotel expenses as reported in our
consolidated statements of income (loss).
Comparable Hotels
“Comparable systemwide hotels” represents all
properties we manage or franchise (including owned and leased
properties) and that are operated for the entirety of the periods being
compared and that have not sustained substantial damage, business
interruption or undergone large scale <>renovations during the
periods being compared or for which comparable results are not
available. We may use variations of comparable systemwide hotels to
specifically refer to comparable systemwide North American full service
or select service hotels or comparable systemwide international full
service hotels for those properties that we manage or franchise within
the North American and international management and franchising
segments, respectively.<> “Comparable operated hotels” is defined
the same as “Comparable systemwide hotels” with the exception that it
is limited to only those hotels we manage or operate and excludes
hotels we franchise. “Comparable owned and leased hotels” represents
all properties we own or lease and that are operated and consolidated
for the entirety of the periods being compared and have not sustained
substantial damage, business interruption or undergone large scale
renovations during the periods being compared or for which comparable
results are not available. Comparable systemwide hotels and comparable
owned and leased hotels are commonly used as a basis of measurement in
the industry. “Non-comparable systemwide hotels” or “Non-comparable
owned and leased hotels” represent all hotels that do not meet the
respective definition of “comparable” as defined above.
Revenue per Available Room (RevPAR)
RevPAR is the product of the average daily rate
and the average daily occupancy percentage. RevPAR does not include
non-room revenues, which consist of ancillary revenues generated by a
hotel property, such as food and beverage, parking, telephone and other
guest service revenues. Our management uses RevPAR to identify trend
information with respect to room revenues from comparable properties
and to evaluate hotel performance on a regional and segment basis.
RevPAR is a commonly used performance measure in the industry.
RevPAR changes that are driven predominately by
changes in occupancy have different implications for overall revenue
levels and incremental profitability than do changes that are driven
predominately by changes in average room rates. For example, increases
in occupancy at a hotel would lead to increases in room revenues and
additional variable operating costs (including housekeeping services,
utilities and room amenity costs), and could also result in increased
ancillary revenues (including food and beverage). In contrast, changes
in average room rates typically have a greater impact on margins and
profitability as there is no substantial effect on variable costs.
Average Daily Rate (ADR)
ADR represents hotel room revenues, divided by
total number of rooms sold in a given period. ADR measures average room
price attained by a hotel and ADR trends provide useful information
concerning the pricing environment and the nature of the customer base
of a hotel or group of hotels. ADR is a commonly used performance
measure in the industry, and we use ADR to assess the pricing levels
that we are able to generate by customer group, as changes in rates
have a different effect on overall revenues and incremental
profitability than changes in occupancy, as described above.
Occupancy
Occupancy represents the total number of rooms
sold divided by the total number of rooms available at a hotel or group
of hotels. Occupancy measures the utilization of our hotels’ available
<>capacity. Management uses occupancy to gauge demand at a
specific hotel or group of hotels in a given period. Occupancy levels
also help us determine achievable ADR levels as demand for hotel rooms
increases or decreases.
Select Service
The term “select service” includes our Hyatt Place
and Hyatt Summerfield Suites brands. These properties have limited food
and beverage outlets and do not offer comprehensive business or banquet
facilities but rather are suited to serve smaller business meetings.
FORWARD-LOOKING STATEMENTS
Forward-Looking Statements in this press
release, which are not historical facts, are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include statements about our plans, strategies,
occupancy and ADR trends, market share, the number of properties we
expect to open in the future, our expected capital expenditures,
depreciation and amortization expense and interest expense, estimates,
financial performance, prospects or future events and involve known and
unknown risks that are difficult to predict. As a result, our actual
results, performance or achievements may differ materially from those
expressed or implied by these forward-looking statements. In some
cases, you can identify forward-looking statements by the use of words
such as “may,” “could,” “expect,” “intend,” “plan,” “seek,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,”
“continue,” “likely,” “will,” “would” and variations of these terms and
similar expressions, or the negative of these terms or similar
expressions. Such forward-looking statements are necessarily based upon
estimates and assumptions that, while considered reasonable by us and
our management, are inherently uncertain. Factors that may cause actual
results to differ materially from current expectations include, among
others, the depth and duration of the current economic downturn; levels
of spending in the business, travel and leisure industries as well as
consumer confidence; declines in occupancy and average daily rate;
hostilities, including future terrorist attacks, or fear of hostilities
that affect travel; travel-related accidents; changes in the tastes and
preferences of our customers; relationships with associates and labor
unions and changes in labor law; the financial condition of, and our
relationships with, third-party property owners, franchisees and
hospitality venture partners; if our third-party owners, franchisees or
development partners are unable to access the capital necessary to fund
current operations or implement our plans for growth; risk associated
with potential acquisitions and dispositions and the introduction of
new brand concepts; changes in the competitive environment in our
industry and the markets where we operate; outcomes of legal
proceedings; changes in federal, state, local or foreign tax law;
fluctuations in currency exchange rates; general volatility of the
capital markets; our ability to access the capital markets; and other
risks discussed in the Company’s filings with the U.S. Securities and
Exchange Commission, including our Annual Report on Form 10-K,
which filings are available from the SEC. We caution you not to place
undue reliance on any forward-looking statements, which are made as of
the date of this press release. We undertake no obligation to update
publicly any of these forward-looking statements to reflect actual
results, new information or future events, changes in assumptions or
changes in other factors affecting forward-looking statements, except
to the extent required by applicable laws. If we update one or more
forward-looking statements, no inference should be drawn that we will
make additional updates with respect to those or other forward-looking
statements.
About Hyatt Hotels Corporation
Hyatt Hotels Corporation, headquartered in
Chicago, is a leading global hospitality company with a proud heritage
of making guests feel more than welcome. Thousands of members of the
Hyatt family in 45 countries strive to make a difference in the lives
of the guests they encounter every day by providing authentic
hospitality. The Company’s subsidiaries manage, franchise, own and
develop hotels and resorts under the Hyatt®, Park
Hyatt®, Andaz®, Grand Hyatt®, Hyatt Regency®, Hyatt
Place® and Hyatt Summerfield Suites®
brand names and have locations on six continents.
Hyatt Residential Group, Inc., a Hyatt
Hotels Corporation subsidiary, develops, operates, markets or
licenses as Hyatt ResidencesTM and
Hyatt Vacation Club®,
which is changing its name to Hyatt
Residence ClubTM. As of December 31, 2010, the
company’s worldwide portfolio consisted of 453 properties. For more
information, please visit www.hyatt.com.
To download the Q4 2010 Earnings Release with
Tables, please visit Hyatt's Investor Relations wesbite.
|