Strengthening corporate group demand has put Hyatt Hotels Corp. in a position to push for group rate increases, president and CEO Mark Hoplamazian said Wednesday during the company's quarterly earnings conference call.
Hyatt's total group production—bookings made for future events—during the first quarter increased 11 percent year over year, marking four quarters in a row of "solid year-over-year increases," according to Hoplamazian. Group revenues at U.S. managed full-service hotels increased 9 percent during the quarter. Association business largely has been steady, but Hyatt was "struck by how strong corporate was this past quarter," he said.
Group business from the technology sector—including hardware and software manufacturers as well as consultants—has led the growth, and group business from the manufacturing, insurance and pharmaceutical sectors also has shown strength, Hoplamazian said. Even government group business, which of late has been a drag on overall group numbers, was up for the quarter, though it did not indicate a "material or significant trend," he said.
Corporate group growth also contributed to "an expansion of banquet revenue, as corporate groups are bringing more spend into their meetings," Hoplamazian said. "As this continues, we expect to see more rate movement."
During the first quarter, the average daily rate at Hyatt properties globally increased 3 percent year over year to $180.39. Full-service ADR in the Americas increased 4.5 percent to $185.38, and select-service ADR increased 5.3 percent to $115.93. Full-service ADR declined in the Asia/Pacific region (down 2 percent to $227.08) and was up slightly in Europe, Africa, the Middle East and Southwest Asia (up 0.8 percent to $246.64).
ADR was up across all Hyatt brands except Park Hyatt, which had a first-quarter ADR decline of 1.3 percent to $363.11.
Hyatt's systemwide occupancy increased 2 percentage points to 70.6 percent. In the Americas, full-service occupancy increased 2.1 percentage points to 71.3 percent, and select-service occupancy increased 1.1 percentage points to 73.5 percent. Occupancy also was up in the Asia/Pacific region (up 2.9 percentage points to 66.6 percent) and the EMEA and Southwest Asia regions (collectively up 1.4 percentage points to 65.7 percent).
Hyatt's first-quarter net income was $56 million, compared with $8 million in the first quarter of 2013.