Hyatt Reports Fourth Quarter 2011 Results

CHICAGO--(www.hospitalitybusinessnews.com)--Hyatt Hotels Corporation today reported financial results as follows:

“As we move forward to 2012 and beyond, we continue to invest for the long-term – in our people, in our brands and in our hotels – toward our goal of becoming the most preferred brand in each segment that we serve, our ‘path to preference’.”

• Adjusted EBITDA was $143 million in the fourth quarter of 2011 compared to $118 million in the fourth quarter of 2010, an increase of 21.2%.
• Net income attributable to Hyatt was $52 million, or $0.31 per share, during the fourth quarter of 2011 compared to net income attributable to Hyatt of $6 million, or $0.03 per share, in the fourth quarter of 2010. Adjusted for special items, net income attributable to Hyatt was $52 million, or $0.31 per share, during the fourth quarter of 2011 compared to net income attributable to Hyatt of $12 million, or $0.07 per share, during the fourth quarter of 2010. See the table on page 3 of the accompanying schedules for a summary of special items.
• Comparable owned and leased hotels RevPAR increased 6.0% in the fourth quarter of 2011 compared to the fourth quarter of 2010.
• Owned and leased hotel operating margins increased 310 basis points in the fourth quarter of 2011 compared to the fourth quarter of 2010. Comparable owned and leased hotel operating margins increased 180 basis points in the fourth quarter of 2011 compared to the same period in 2010. See the table on page 9 of the accompanying schedules for a reconciliation of comparable owned and leased hotel operating margin to owned and leased hotel operating margin.
• Comparable North American full-service RevPAR increased 6.5% in the fourth quarter of 2011 compared to the fourth quarter of 2010. Comparable North American select-service RevPAR increased 5.5% in the fourth quarter of 2011 compared to the fourth quarter of 2010.
• Comparable International RevPAR increased 2.9% (3.0% excluding the effect of currency) in the fourth quarter of 2011 compared to the fourth quarter of 2010.
• The Company added seven properties during the fourth quarter of 2011.

Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “We are pleased to see sustained transient business travel around the world in the fourth quarter. Demand from this segment was the primary driver of our results in 2011. Though group demand in the U.S. was stronger in the fourth quarter of 2011 than in 2010, corporations remain cautious about making longer-term commitments and this continues to limit visibility into forward bookings.”

“We remain focused on the three priorities which are key to creating long-term value – our people, our brands and our financial capital and asset base. Our people deliver our brands every day and enlisting them to identify how we may better serve our guests is critical to our success. We are committed to ensuring that they are highly engaged and are expanding our leadership development activities to ensure that the next generation of leadership at Hyatt comes from Hyatt.”

“We are committed to enriching our brand management expertise and have dedicated significant resources and new systems capabilities to expand our knowledge of our guests and of the meeting planners and corporate travel managers who are current and prospective Hyatt customers. We are now applying all of these data and insights to improve our delivery of authentic hospitality in ways that will differentiate our brands. We are doing this against a backdrop of extremely strong growth in our loyal customer base – Hyatt Gold Passport membership expanded by 15% in 2011.”

“Our select-service brands continue to gain momentum. We have seen over 14% RevPAR growth in the select-service segment over the past two years and intend to build on the back of the 75% expansion of our extended-stay properties in the U.S. and the first openings of Hyatt Place properties outside of the U.S. in 2012.”

“We will put our capital and asset base to more active use over the coming years. We have nearly completed significant renovations at several of our large owned hotels and we are very excited about our ‘refreshed’ presence. In New York City, we have four new or recently renovated hotels that have opened within the last 24 months. The momentum continues with several hotels in development that will double our presence by 2014, giving us an extremely well-located, essentially new property portfolio representing almost all of our brands in New York City within two years.”

“As we move forward to 2012 and beyond, we continue to invest for the long-term – in our people, in our brands and in our hotels – toward our goal of becoming the most preferred brand in each segment that we serve, our ‘path to preference’.”

SEGMENT RESULTS & OTHER ITEMS

Owned and Leased Hotels Segment

Adjusted EBITDA increased 20.7% in the fourth quarter of 2011 compared to the same period in 2010.

RevPAR for comparable owned and leased hotels increased 6.0% in the fourth quarter of 2011 compared to the same period in 2010. Occupancy improved 230 basis points, and ADR increased 2.5%.

Revenues increased 4.9% in the fourth quarter of 2011 compared to the same period in 2010. Comparable hotel revenues increased 4.7% in the fourth quarter of 2011 compared to the same period in 2010.

Owned and leased expenses increased 0.8% in the fourth quarter of 2011 compared to the same period in 2010. Excluding expenses related to benefit programs funded through Rabbi Trusts and non-comparable hotel expenses, expenses increased 2.4% in the fourth quarter of 2011 compared to the same period in 2010. See the table on page 9 of the accompanying schedules for a reconciliation of comparable owned and leased hotels expenses to owned and leased hotels expenses.

As part of the acquisition of assets from LodgeWorks, the 150-room Hyatt House Boston/Burlington was added to the portfolio. The property was previously managed by the Company.

One hotel, Hyatt Regency Crown Center, was removed from the portfolio, as the lease agreement expired.

North American Management and Franchising Segment

Adjusted EBITDA increased by 19.4% in the fourth quarter of 2011 compared to the same period in 2010.

RevPAR for comparable North American full-service hotels increased 6.5% in the fourth quarter of 2011 compared to the same period in 2010. Occupancy increased 270 basis points and ADR increased 2.2%.

RevPAR for comparable North American select-service hotels increased 5.5% in the fourth quarter of 2011 compared to the same period in 2010. Occupancy increased 130 basis points and ADR increased by 3.5%.

Revenue from management, franchise, and other fees increased 18.8% in the fourth quarter of 2011 compared to the same period in 2010.

The following three hotels were added to the portfolio during the fourth quarter:

• Hyatt Regency New Orleans (managed, 1,193 rooms)
• Hyatt House Philadelphia/King of Prussia (managed, 147 rooms)
• Hyatt Place Waikiki Beach (franchised, 191 rooms)

Two hotels were removed from the portfolio in the fourth quarter of 2011, including the previously mentioned Hyatt Regency Crown Center.

International Management and Franchising Segment

Adjusted EBITDA increased 3.7% in the fourth quarter of 2011 compared to the same period in 2010.

RevPAR for comparable international hotels increased 2.9% (3.0% excluding the effect of currency) in the fourth quarter of 2011 compared to the same period in 2010. Occupancy decreased 60 basis points and ADR increased 3.7% (3.9% excluding the effect of currency).

Revenue from management, franchise and other fees was flat in the fourth quarter of 2011 compared to the same period in 2010.

The following four hotels were added to the portfolio during the fourth quarter:

• Park Hyatt Abu Dhabi Hotel and Villas (managed, 306 rooms)
• Andaz Shanghai (managed, 307 rooms)
• Hyatt Regency Danang Resort and Spa (managed, 295 rooms)
• Hyatt Capital Gate, Abu Dhabi (managed, 189 rooms)

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased by 3.7% in the fourth quarter of 2011 compared to the same period in 2010. Adjusted selling, general, and administrative expenses increased by 4.0% in the fourth quarter of 2011 compared to the same period in 2010. See the table on page 8 of the accompanying schedules for a reconciliation of adjusted selling, general, and administrative expenses to selling, general, and administrative expenses.

OPENINGS AND FUTURE EXPANSION

Hyatt added seven hotels in the fourth quarter of 2011, each of which is listed above. During the 2011 full fiscal year, the Company opened 40 hotels, representing 8,573 rooms. Nine hotels, representing 3,260 rooms, were removed from the portfolio during the 2011 full fiscal year.

The Company expects to open a significant number of new properties in the future. As of December 31, 2011, this effort was underscored by executed management or franchise contracts for more than 170 hotels (or more than 38,000 rooms) across all brands. The executed contracts represent potential entry into several new countries and expansion into many new markets in which the Company is under-represented. Approximately 70% of the projected new hotels will be located outside North America.

CAPITAL EXPENDITURES

Capital expenditures during the fourth quarter of 2011 totaled $115 million, categorized as follows:

• Maintenance: $43 million
• Enhancements to existing properties: $68 million
• Investment in new facilities: $4 million

Capital expenditures during the 2011 full fiscal year totaled $331 million, categorized as follows:

• Maintenance: $92 million
• Enhancements to existing properties: $226 million
• Investment in new facilities: $13 million

CORPORATE FINANCE

On December 31, 2011, the Company had total debt of approximately $1.2 billion, cash and cash equivalents, including investments in highly-rated money market funds and similar investments, of approximately $530 million, short-term investments of approximately $590 million and undrawn borrowing availability of approximately $1.4 billion under its revolving credit facility.