Hyatt Hotels Corp. is encouraged by the steady recent improvement in its business transient and group segments, president and CEO Mark Hoplamazian said during a Wednesday second-quarter earnings call.
"Our systemwide business transient [revenue per available room] in June has nearly doubled from the first quarter, driven by strength in the United States and mainland China," he said. "Notably, RevPAR performance [was] trending at 60 percent of 2019 levels at the end of June compared to just 40 percent two months prior."
Business transient demand varies significantly by market, he continued. In the United States, urban markets such as New York, Chicago, San Francisco and Washington, D.C. still have recovered only 20 percent to 30 percent of pre-pandemic volume, while the majority of other urban markets sport at least a 50 percent recovery rate, according to Hyatt.
Regional business and some smaller corporate accounts are recovering the quickest, Hoplamazian said, "but we're also seeing acceleration in our [other] accounts and continue to expect a more robust recovery in the fall."
Group Recovery
Group revenue booked in June for events in 2021 reached approximately 90 percent of June 2019 levels of same-year booked volume at Hyatt's Americas full-service managed properties, with the cancellation rate reduced to a fraction of the levels experienced a couple months ago, Hoplamazian added.
"More groups large and small have been returning to our hotels and ballrooms," he said. "Additionally, group business booked in the second quarter for 2022 at an average rate that is 5 percent higher than the same period in 2019."
Hoplamazian added that Hyatt has about $760 million in group business on the books for next year, compared with about $900 million at the same point in 2019 for the following year. Leads are tracking higher than at this point in in 2019, he said, and Hyatt is seeing average group size for events scheduled for Q4 increase from those set for Q3.
"The biggest area of growth is in groups that are between 100 and 250 participants," Hoplamzian said. "And we're encouraged by citywides. [They're] coming back pretty significantly. So something in the range of a quarter of the business on the books relates to citywides, and 70 percent of those are in the first half of next year and are firming up at this point."
Corporate groups comprise about two-thirds of group bookings for the third quarter and about 50 percent for the fourth quarter, with association meetings starting to come back. "As we look into 2022, I think the biggest deficit we've got in the first half is corporate bookings, which is not surprising because it's on a shorter time horizon for booking, and associations are strengthening over the course of the next year," Hoplamzian said. Next year, "group business could be at something like 85 percent of 2019 levels."
Q2 Performance Metrics
Second-quarter systemwide RevPAR was $72.47, representing a 49.8 percent decline compared with the same period in 2019 on a reported basis and a 58 percent increase compared with Q1, said CFO Joan Bottarini. Systemwide occupancy levels for the quarter were at 47.6 percent, up 33.9 percentage points year over year. Average daily rate was $152.21, up 33.1 percent from 2020.
"Systemwide RevPAR was trending approximately 50 percent of 2019 levels just prior to Memorial Day, and it's grown to nearly 75 percent of 2019 levels for the month of July, with RevPAR ending at approximately $100," Hoplamazian said. "The higher RevPAR was bolstered by a significant increase in rates, which are nearing fully recovered levels."
RevPAR growth in the United States was the primary driver of the jump in systemwide RevPAR. The U.S. benefitted from widespread vaccine availability and reduced interstate travel restrictions, which unleashed significant pent-up leisure demand, Hoplamazian noted.
The Americas full-service Q2 RevPAR was $81.72, up 984.3 percent year over year. Occupancy was 42.3 percent, up 33.9 percentage points. ADR was $192.99, up 37.4 percent. For Hyatt's Americas select-service portfolio, Q2 RevPAR was $76.11, up 256.2 percent year over year. Occupancy was 63.9 percent, up 42.2 percentage points. ADR was $119, up 21 percent.
Hyatt reported a net loss of $9 million for the quarter compared with a loss for the same period in 2020 of $236 million.
Hyatt Pipeline
The company grew its net rooms by 7.1 percent year over year during the quarter, as 27 hotels with 4,302 rooms opened. As of June 30, Hyatt had executed management or franchise contracts for about 495 hotels with about 101,000 rooms. This compares with approximately 490 hotels with 100,000 rooms as of March 31.
Hyatt's independent collection brands, including the Unbound Collection by Hyatt, JDV by Hyatt and Destination by Hyatt, accounted for all eight of the conversions in the quarter.
The company expects 2021 net unit growth to be greater than 6 percent.
RELATED: Hyatt Q1 earnings