Hyatt Hotels Corp. reported a 10.6 percent year-over-year increase in net income for the second quarter, to $86 million. "Strong transient demand drove 1.3 percent systemwide RevPAR growth, and fees and net rooms grew at a double-digit pace inclusive of the Two Roads Hospitality LLC acquisition," said president and CEO Mark Hoplamazian.
Hyatt, however, reduced its 2019 revenue per available room guidance from a range of 1 percent to 3 percent to a range of 1 percent to 2 percent, similar to moves made last week by Hilton and Wyndham Hotels & Resorts.
Comparable U.S. hotel RevPAR decreased 0.3 percent, full-service hotel RevPAR increased 0.7 percent and select-service hotel RevPAR decreased 2.3 percent. For comparable Americas full-service hotels, occupancy increased 80 basis points, average daily rate increased 1.5 percent and RevPAR, "driven by strength in certain resort locations outside of the U.S.," increased 2.5 percent.
Hyatt continued to struggle with group business in the second quarter. At comparable U.S. full-service hotels, revenue from group rooms decreased 2.9 percent, room nights decreased 3.7 percent and ADR increased 0.9 percent. The decreases owed largely to the timing of the Easter holiday; fewer attendees than expected for associations and SMERF—social, military, educational, religious and fraternal—groups; and ongoing weakness in the company's largest group market, Chicago, which accounted for about half of the negative variance, Hoplamazian said. For that destination, group room revenue dropped 15 percent year over year for the first half of the year, and overall RevPAR declined 3.6 percent year over year for the second quarter.
However, the company's overall "corporate group business continues to hold up quite well," Hoplamazian added. "While total group production in quarter two is down in the high single digits, our corporate group production is up 2 percent. The hotel teams have done a remarkable job to drive significant transient business to fill gaps created by softer group business. This is especially true in group-based convention hotels in markets like Orlando, Chicago and San Antonio."
"2020 looks to be strong," Hoplamazian said of group business. "Its pace is up in the mid-single digits, and rate is the majority of that. 2021 is down a small amount, but we feel confident we'll fill that, and 2022, which is too far out to matter much at this point, is up by mid-single digits, as well."
Hyatt's net rooms grew 12.6 percent throughout the second quarter. That growth equaled 3,909 rooms across 22 hotels. Excluding the acquisition of Two Roads, rooms increased 6.9 percent. Hyatt now expects to open 85 hotels in 2019 compared to the prior expectation of 80.
"Developer demand for our brands remains strong, with our base of executed contracts for future openings increasing by 1,000 rooms in the quarter, net of [the] opening of nearly 4,000 rooms," Hoplamazian said. "Based on this development activity and an increase in conversions of hotels to our brands, we now expect to grow net rooms by 7.25 percent to 7.75 percent this year, as compared with our prior expectation of 7 percent to 7.5 percent."
Hyatt also raised its guidance on 2019 net income from a range of $144 million to $183 million to a range of $231 million to $275 million.
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