While Hyatt Hotels Corp. noted strong demand in the group
segment during the first quarter and steadiness from business transient
following a post-election boost last year, CEO Mark Hoplamazian said the
company is still seeing some hesitancy from corporate customers.
For the quarter, group revenue at U.S. full-service hotels
increased 10 percent year over year, which contributed to a decline of about 1
percent in transient revenue from displacement. Hyatt saw strong group demand
from consulting, retail, banking and finance sectors but softer demand from
technology and pharmaceutical companies. However, group booking pace for the second
and third quarters is tepid, according to CFO Patrick Grismer. Hilton reported
a similar outlook for the segment in its recent earnings call.
Though Hoplamazian said corporate demand looks solid, as large
managed travel programs bolster transient and group demand, he added that
corporates also seem to be "more cautious making forward commitments."
The group segment should still see a low-single-digit-percentage increase in
year-over-year revenue for the full year.
The company saw a drop in international inbound travel,
which it attributed to the strong U.S. dollar. International markets including
Mexico, Canada, Japan and the U.K. posted double-digit-percentage room night
declines. However, the effects of the decreases were marginal on Hyatt's
business, as international inbound travel makes up only 4 percent of Hyatt's
worldwide room revenue.
Systemwide occupancy increased 2 percentage
points to 71.5 percent, while average daily rate grew 1.5 percent to $182.50.
Hyatt added 11 hotels, or 1,856 rooms, to its portfolio during the quarter and
is on pace to add 60 hotels during 2017.
Net income increased 104.8 percent to $70 million, partially fueled by revenue gained from recycling (sale) of owned and leased hotels and from a 14 percent increase in management and franchise fees.