Not unlike other hotel companies that have reported fourth-quarter earnings so far this month, Hyatt Hotels Corp. is seeing a more meaningful pickup in group bookings for the second half of 2021 compared with the first half of the year, said president and CEO Mark Hoplamazian on a Thursday earnings call. But he also hinted that groups might not necessarily come in third in terms of the order of recovery, provided vaccinations and rapid Covid-19 testing stay on target over the course of the year.
"We have previously been saying that the sequence [for the recovery] would be leisure transient, followed by business transient, followed by group," he said. "And I think the potential upside surprise in that progression is that we might see group come back in a more purposeful way, in a more significant way."
What led to that speculation are Hyatt's fourth-quarter 2020 and year-to-date 2021 group booking trends. Group revenue totaled just $44 million for the last three quarters of 2020, but it improved sequentially over the year, and half of that amount was realized in the fourth quarter. From the beginning of October through January, the company booked about $170 million in new group business for all future months, excluding any rebooking activity.
"That represents a 20 percent acceleration over Q3 in pure new group bookings," Hoplamazian said. "We are, for the first time since Covid-19 began, seeing association and corporate activity pick up for 2022 and beyond. And we have early signs that we will actually host corporate meetings as early as the second quarter of 2021."
In addition, 28 percent of canceled group revenue from March through December of 2020, representing $300 million, rebooked. Cancellations in January were down 25 percent compared with December. Lead generation in January through the first week of February rose to levels not seen since early 2020, Hoplamazian said, with lead volumes improving 50 percent month over month. About 60 percent of that increased activity is for 2021 arrivals, with the majority hitting the second half of the year.
"This activity is concentrated in our resorts and also, importantly, in our primary convention hotels," Hoplamazian added. "[Booking] pace for the second half of 2021 is down just over 30 percent, and pace into 2022, where we have a bit over 40 percent of our total revenue booked at this time, is down roughly 10 percent."
He also noted that Hyatt is working "from scratch" with several of the company's largest corporate customers on designing a new approach to hybrid meetings, because "cobbling together pre-existing AV capabilities and having a digital leg to a meeting isn't really satisfying [their] core needs. It's really creating an engaging and meaningful experience for those who are joining digitally. That is the new chapter for us moving forward," he said.
Q4 and Full-Year 2020 Results
Despite being bullish on future group business, leisure stays primarily drove Hyatt's occupancy for the fourth quarter, and the company's key performance indicators were muted for both that period and full-year 2020.
For the fourth quarter, comparable systemwide revenue per available room decreased 68.9 percent year over year. The occupancy rate was down 39.9 percentage points to 31.6 percent. Average daily rate fell 29.6 percent. For full-year 2020, RevPAR dropped 65.4 percent year over year. Occupancy was off 41.9 percent to 31.6 percent. ADR was down 19.6 percent.
Hyatt posted a net loss of $203 million for the fourth quarter and a loss of $703 million for the full year.
The company opened 23 new hotels with 6,877 rooms during the fourth quarter. In 2020, Hyatt opened a total of 72 hotels with 14,972 rooms, including 11 properties that were conversions, for net rooms growth of 5.2 percent year over year. The company's pipeline totals 500 hotels with 101,000 rooms, which remained unchanged from 2019. Approximately 32 percent of pipeline rooms are planned for the Americas region.
As of Dec. 31, 94 percent of systemwide hotels and 93 percent of rooms were open, compared with 92 percent of hotels and 88 percent of rooms at the end of the third quarter.
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