Too bad Hyatt. As the dark clouds of the pandemic lift, market turbulence overshadows his optimism. Still, that doesn’t cloud the outlook for Hyatt executives.
Hyatt Hotels Corp said on Tuesday that its average daily rates in April hit the best record ever for the company. Travelers have shown a willingness to pay for travel as they get back on the road with the pandemic easing in many countries.
Still, Hyatt’s optimism on an earnings call was overshadowed by broader turmoil in financial markets. Many investors seemed confused by rising US interest rates, slowing Chinese growth, the uncertain impact of the war in Ukraine on European economies and spoke of possibly more virulent forms of Covid-19.
“We don’t see any evidence of a slowdown in the pace of bookings,” President and CEO Mark Hoplamazian said. “In fact, the pace of booking itself is really increasing across all of our business transit segments.”
In the first quarter, the Omicron wave treated Hyatt a net loss of $73 million, one of the last major hotel brands not to switch to profit. But performance has been improving since January, executives said. An emerging rebound in high-end business and leisure travel would tip the business into the black later this year, they said.
Hyatt sees room for dark clouds
Some analysts worry that market turmoil and rising inflation could sap pent-up demand for travel. Still, Hyatt executives were optimistic about the prospects for their business.
Hoplamazian cited an AlphaWise survey released Tuesday by Morgan Stanley Research. Consumers in households with incomes over $150,000 told pollsters they still expect to spend much more than average on domestic leisure, work-related travel and international travel over the next six months.
Hyatt will benefit from the spending spree, Hoplamazian said, as 42% of its properties fit descriptions of luxury, lifestyle or resort stays. About 30 percent are luxury.
The company attracted a record number of leisure travelers – who drove nearly 60% of Hyatt room revenue in the first trimester.
The company’s rebound accelerated month after month. If you subtract China, which faces tough pandemic-related travel restrictions, Hyatt’s revenue per available room — a key industry metric — rose 3% from pre-pandemic levels. . Gross transit revenue booked for stays this year was 6% higher than April 2019.
The company, with a market value of $9.2 billion, announced a strengthening of its bookings for 2022 in April. For example, gross revenue from group rooms booked for stays this year at the company’s full-service properties reached 42% above April 2019 levels.
Hyatt executives also reaffirmed their forecast that the company will see net room growth of 6% this year despite some uncertainty over supply chain issues.
Resorts Prove Popular
Hyatt’s acquisition of Apple Leisure Group six months ago proved timely. Consumers have paid top dollar for the subsidiary’s vacation packages in recent months.
“Everything is happening at a higher level and better flow across all dimensions of the business than what we had underwritten,” Hoplamazian said.
On Monday, Hyatt added its loyalty program to the inventory of Apple Leisure Group, which will market its 30 million rewards members at these resorts and provide redemption opportunities for members with loyalty points. Resorts can now be booked through Hyatt’s direct channels, which will reduce customer acquisition costs as a cheaper alternative to third-party distribution.
“It’s going to be hard for me to moderate my excitement because the data is pretty clear,” Hoplamazian said, noting that the company’s resorts are showing strong demand at high prices.