Hyatt Hotels Corp.'s second-quarter comparable systemwide revenue per available room declined 89.4 percent year over year to $15.01, and the hotel company recorded a net loss of $236 million compared with net income of $86 million for the same period in 2019.
These results were expected, Hyatt president and CEO Mark Hoplamazian said during Tuesday's earnings call, pointing to the company's first-quarter projection that "the second quarter would bring the lowest demand levels the industry has ever seen."
The recovery has been mixed, as travel restrictions and quarantines remain in parts of the world, but Hyatt's RevPAR improved sequentially each month after a low point in April. Still, its systemwide RevPAR figures were affected both by the inclusion of closed hotels in the calculations and Hyatt's chain-scale composition, said Hyatt CFO Joan Bottarini. "There is significant exposure to upper-upscale and luxury properties and the top 25 markets in the United States that have been weaker than other market tracks over the past several months," she said.
Hyatt's upscale brands outperformed the upper-upscale and luxury brands in the quarter, with year-over-year RevPAR declines of about 80.5 percent for the former and the low 90s for the two higher tiers. Occupancy for upscale brands averaged 22 percent, compared with 9 percent and 11.7 percent, respectively, for upper-upscale and luxury.
Occupancy for the second quarter was down 63 percentage points year over year to 13.5 percent. For the half year, it was down 40.5 percentage points to 32.4 percent. Average daily rate was down 39.8 percent to $111.26. For the half-year, it was down 10.7 percent to $164.62.
Net rooms grew 5.8 percent, with 10 new hotels, representing 1,879 rooms, opened in the second quarter. The Americas net rooms grew by 4.5 percent year over year. The outlook for rooms growth for 2020 could be more in the 4 percent to 4.5 percent range as opposed to the 6.5 percent to 7 percent initially anticipated, Hoplamazian said, but that does not include a number of conversions the company is currently working on.
"We are tracking and pursuing conversions, and I do think that they will be as if not more so productive for us this year than last," he added. "When they make it into the pipeline is unknown."
A Boost in Greater China
Greater China, where the Covid-19 pandemic was first reported, leads Hyatt's recovery with occupancy reaching 57 percent by the end of July. Excluding Hong Kong, Macau and Taiwan, occupancy in China reached approximately 65 percent by July 31.
Hoplamazian added that Hyatt has also seen some business transient return in China, and that segment now represents more than 25 percent of total demand in the region. Also in July some group business in China returned, with hosted product launches from BMW, Volvo and Gucci in Hyatt hotels. "We are encouraged by this across the board," he said.
In North America, Testing Meetings
Hyatt expects near-term group business cancellations in North America to continue over the remainder of the year. Despite that, "while demand for large meetings is limited, we have smaller group events occurring, and have been working with meeting planners on new designs for events," Hoplamazian said. "In addition to standard safety protocols and unique F&B options, we are piloting and testing hybrid meeting formats, which sometimes involve the use of multiple hotel locations to accommodate distancing requirements and travel limitations, and the use of technology to seamlessly combine virtual and live experiences."
Overall in the Americas, where Hyatt has the most hotels compared with its other regions, full-service hotels took the greatest hit, with RevPAR for the quarter down 95.7 percent year over year to $7.29. Select-service hotel RevPAR was down 81.2 percent to $21.22. Occupancy for full- and select-service properties was down 74 percentage points to 5.2 percent and 57.7 percentage points to 21.6 percent, respectively. In addition, Hoplamazian said that the booking window has shortened substantially to just four days ahead of the date of stay for the United States. "This is the shortest transient booking window we have seen," he said.
Hotel Openings
Hyatt closed more than one-third of its hotels in April and took measures to mitigate the pandemic effects by securing additional liquidity and reducing costs through furloughs, pay reductions and reducing nonessential spending, Hoplamazian said. It also laid off about 1,300 corporate employees in May.
The company is applying financial modeling including U.S. Transportation Security Administration and airline data, search and mobility data and hotel booking data "to determine when it becomes desirable to reopen a hotel," he added. "Based on this approach, we've reopened many hotels the past few months, with 80 percent opened at the end of June and approximately 87 percent opened at the end of July." The company plans to reopen most of its remaining hotels over the next couple of months.
Also during the second quarter, Hyatt announced its requirement for guests to wear face masks at its properties in the U.S. and Canada, and it extended its flexible cancellation policy through July 2021.
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