Hyatt Hotels Corporation (“Hyatt” or the “Company”) (NYSE: H) today reported fourth quarter 2012 financial results as follows:
• Adjusted EBITDA was $147 million in the fourth quarter of 2012 compared to $143 million in the fourth quarter of 2011, an increase of 2.8%.
• Net income attributable to Hyatt was $16 million, or $0.09 per share, during the fourth quarter of 2012 compared to net income attributable to Hyatt of $52 million, or $0.31 per share, in the fourth quarter of 2011. Adjusted for special items, net income attributable to Hyatt was $33 million, or $0.20 per share, during the fourth quarter of 2012 compared to net income attributable to Hyatt of $52 million, or $0.31 per share, during the fourth quarter of 2011. See the table on page 3 of the accompanying schedules for a summary of special items.
• Comparable owned and leased hotel RevPAR increased 7.5% in the fourth quarter of 2012 compared to the fourth quarter of 2011.
• Owned and leased hotel operating margins decreased 10 basis points in the fourth quarter of 2012 compared to the fourth quarter of 2011. Comparable owned and leased hotel operating margins decreased 110 basis points in the fourth quarter of 2012 compared to the same period in 2011. 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 U.S. full service hotel RevPAR increased 5.8% in the fourth quarter of 2012 compared to the fourth quarter of 2011. Comparable U.S. select service hotel RevPAR increased 8.7% in the fourth quarter of 2012 compared to the fourth quarter of 2011.
• Six properties were opened.
• The Company repurchased 2,779,038 shares of Class A common stock at a weighted average price of $36.34 per share, for an aggregate purchase price of approximately $101 million.
Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation, said, “During the fourth quarter, our comparable owned and leased RevPAR increased 7.5% as we benefited from solid demand and to a limited extent from renovations completed in prior periods.
“We are expanding into meaningful and new markets around the world with recent openings and we continue to enjoy great demand for our brands around the world as we sign new contracts for additional hotels. During the quarter, we opened the Andaz Amsterdam and our first two select service hotels outside of the U.S. For the year, we opened 22 hotels and our base of executed contracts for new hotels grew by over 15%. We expect to open over 30 hotels in 2013, including the conversion of four iconic hotels in Paris, Nice and Cannes to Hyatt brands. Adding an aggregate of approximately 1,700 rooms, this will more than double our presence in France and is a meaningful expansion of our coverage in continental Europe.
“Looking ahead, we are focused on growing our market share, increasing owned and leased margins, improving results at recently renovated and newly acquired hotels, and continuing to support expansion of our brand presence around the world. We expect that there will be headwinds in some markets, but given our concentration of earnings in the U.S., and the diversity of our business model, we look forward to a year of stable growth.
“During the second half of 2012, we completed several unique transactions to expand presence, recycle capital, earn strong returns, and strengthen our relationships with partners that are important to our future. In addition, we repurchased approximately 3.7 million shares of Class A common stock in 2012 for approximately $136 million. We are well-situated for the future with strong brands, well-positioned hotels, ample resources and a business model that is oriented to take advantage of market opportunities.”
SEGMENT RESULTS & OTHER ITEMS
Owned and Leased Hotels Segment
Total segment Adjusted EBITDA decreased 2.9% in the fourth quarter of 2012 compared to the same period in 2011. Owned and leased Adjusted EBITDA increased 1.2% in the fourth quarter of 2012 compared to the same period in 2011. Pro rata share of unconsolidated hospitality ventures Adjusted EBITDA decreased 21.1% in the fourth quarter of 2012.
RevPAR for comparable owned and leased hotels increased 7.5% in the fourth quarter of 2012 compared to the same period in 2011. Occupancy improved 220 basis points and ADR increased 4.2% compared to the same period in 2011.
Revenues increased 4.9% in the fourth quarter of 2012 compared to the same period in 2011. Comparable hotel revenues increased 2.9% in the fourth quarter of 2012 compared to the same period in 2011.
Revenue for comparable owned and leased hotels was negatively impacted by weak performance in certain international markets and lower relative growth in non-room revenue at U.S. hotels.
Owned and leased hotel expenses increased 5.0% in the fourth quarter of 2012 compared to the same period in 2011. Excluding expenses related to benefit programs funded through rabbi trusts and non-comparable hotel expenses, expenses increased 4.3% in the fourth quarter of 2012 compared to the same period in 2011. Comparable expenses were negatively impacted by insurance costs. 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.
The following two hotels were added to the portfolio during the fourth quarter:
• Hyatt Regency Birmingham (owned, 319 rooms): This property was acquired by the Company for approximately $43 million. The property was previously and will continue to be managed by the Company.
• Andaz Amsterdam (leased, 122 rooms)
During the quarter, the Company closed on the sale of eight select service hotels, with an aggregate of 1,043 rooms, for approximately $87 million. The Company will continue to manage these hotels under long-term agreements.
Americas Management and Franchising Segment
Adjusted EBITDA increased 16.3% in the fourth quarter of 2012 compared to the same period in 2011.
RevPAR for comparable Americas full service hotels increased 5.3% in the fourth quarter of 2012 (5.4% excluding the effect of currency) compared to the same period in 2011. Occupancy increased 60 basis points and ADR increased 4.4% (4.5% excluding the effect of currency) compared to the same period in 2011.
Group rooms revenue at comparable U.S. full service hotels increased 3.3% in the fourth quarter of 2012 compared to the same period in 2011. Group room nights increased 0.4% and group ADR increased 2.9% in the fourth quarter of 2012 compared to the same period in 2011.
Transient rooms revenue at comparable U.S. full service hotels increased 6.9% in the fourth quarter of 2012 compared to the same period in 2011. Transient room nights increased 2.1% and transient ADR increased 4.7% in the fourth quarter of 2012 compared to the same period in 2011.
Revenue from management and franchise fees increased 8.5% in the fourth quarter of 2012 compared to the same period in 2011.
The following three hotels were added to the portfolio during the fourth quarter:
• The LA Hotel Downtown (franchised, 469 rooms): This property is expected to be rebranded Hyatt Regency Los Angeles Downtown upon completion of a renovation.
• Hyatt Place Los Angeles/LAX/El Segundo (franchised, 143 rooms)
• Hyatt Place San Jose/Pinares (managed, 120 rooms)
Three properties were removed from the portfolio during the fourth quarter.
Southeast Asia, China, Australia, South Korea and Japan (ASPAC) Management and Franchising Segment
Adjusted EBITDA increased 7.1% in the fourth quarter of 2012 compared to the same period in 2011.
RevPAR for comparable ASPAC hotels increased 3.1% (2.9% excluding the effect of currency) in the fourth quarter of 2012 compared to the same period in 2011. Occupancy decreased 30 basis points and ADR increased 3.5% (3.3% excluding the effect of currency) compared to the same period in 2011.
Revenue from management and franchise fees was flat in the fourth quarter of 2012 compared to the same period in 2011.
One property was removed from the portfolio during the fourth quarter.
Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management Segment
Adjusted EBITDA decreased 36.4% in the fourth quarter of 2012 compared to the same period in 2011. Adjusted EBITDA was impacted on a year-over-year basis by a bad debt recovery in the fourth quarter of 2011.
RevPAR for comparable EAME/SW Asia hotels decreased 0.8% (increased 1.1% excluding the effect of currency) in the fourth quarter of 2012 compared to the same period in 2011. Occupancy increased 220 basis points and ADR decreased 4.0% (decreased 2.2% excluding the effect of currency) compared to the same period in 2011. RevPAR was negatively impacted by lower performance in markets in the Middle East and in Gulf Cooperation Council countries.
Revenue from management and franchise fees decreased 5.3% in the fourth quarter of 2012 compared to the same period in 2011. Management and franchise fees were impacted by the aforementioned market factors.
The following three hotels were added to the portfolio during the fourth quarter:
• Park Hyatt Chennai (managed, 201 rooms)
• Andaz Amsterdam (leased, 122 rooms)
• Hyatt Place Hampi (managed, 115 rooms)
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses decreased by 7.1% in the fourth quarter of 2012 compared to the same period in 2011. Adjusted selling, general, and administrative expenses decreased by 2.6% in the fourth quarter of 2012 compared to the same period in 2011. 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
Six hotels were added in the fourth quarter of 2012, each of which is listed above. During the 2012 full fiscal year, the Company opened 22 hotels, representing 5,384 rooms. Seven hotels, representing 3,064 rooms, were removed from the portfolio during the 2012 full fiscal year.
The Company expects that a significant number of new properties will be opened under various Company brands in the future. As of December 31, 2012 this effort was underscored by executed management or franchise contracts for approximately 200 hotels (or approximately 45,000 rooms) across all brands. The executed contracts represent potential entry into several new countries and expansion into many new markets or markets in which the Company is under-represented. See the table on page 14 of the accompanying schedules for a breakdown of the executed contract base.
CAPITAL EXPENDITURES
Capital expenditures during the fourth quarter of 2012 totaled $91 million, categorized as follows:
• Maintenance: $42 million
• Enhancements to existing properties: $39 million
• Investment in new properties: $10 million
Capital expenditures during the 2012 full fiscal year totaled $301 million, categorized as follows:
• Maintenance: $106 million
• Enhancements to existing properties: $153 million
• Investment in new properties: $42 million
SHARE REPURCHASE
During the fourth quarter, the Company repurchased 2,779,038 shares of Class A common stock at a weighted average price of $36.34 per share, for an aggregate purchase price of approximately $101 million. From January 1 through February 8, 2013, the Company repurchased 12,123 shares of Class A common stock at a weighted average price of $37.95 per share, for an aggregate purchase price of approximately $0.5 million. The Company has approximately $63 million remaining under its current share repurchase authorization.
CORPORATE FINANCE
During the quarter, the Company completed the following transactions:
• Acquired the Hyatt Regency Birmingham, previously managed by the Company, for approximately $43 million.
• Closed on the sale of eight select service hotels with an aggregate of 1,043 rooms for approximately $87 million. The Company will continue to manage these hotels under long-term agreements.
• Formed a joint venture with Host Hotels & Resorts to develop and operate a Hyatt Residence Club in Maui, Hawaii. The Company expects to invest approximately $40 million in the vacation ownership property.
Subsequent to the end of the quarter, the Company closed on the sale of three select service hotels, with an aggregate of 426 rooms, for approximately $36 million.
On December 31, 2012, the Company had total debt of approximately $1.2 billion.
On December 31, 2012, the Company had cash and cash equivalents, including investments in highly-rated money market funds and similar investments, of approximately $413 million and short-term investments of approximately $514 million.
On December 31, 2012, the Company had undrawn borrowing availability of approximately $1.4 billion under its revolving credit facility.
2013 INFORMATION
The Company is providing the following information for the 2013 fiscal year:
• Adjusted SG&A expense is expected to be approximately $305 million.
• Capital expenditures are expected to be approximately $300 million, including approximately $120 million for investment in new properties, such as Grand Hyatt Rio de Janeiro, Hyatt Place Omaha and other properties.
• Depreciation and amortization expense is expected to be approximately $340 million.
• Interest expense is expected to be approximately $70 million.
• The Company expects to open over 30 hotels in 2013.
CONFERENCE CALL INFORMATION
The Company will hold an investor conference call today, February 13, 2013, at 10:30 a.m. CT. The Company requests that questions be submitted via email toearnings@hyatt.com by 9:00 a.m. CT. Hyatt management will read and respond to as many submitted questions as possible. All interested persons may listen to a simultaneous webcast of the conference call, which may be accessed through the Company's website at http://www.hyatt.com and selecting the Investor Relations link located at the bottom of the page, or by dialing 617.597.5329, passcode #56571665, approximately 10 minutes before the scheduled start time. For those unable to listen to the live broadcast, a replay will be available from 1:00 p.m. CT on February 13, 2013 through midnight on February 20, 2013 by dialing 617.801.6888, passcode #51844304. Additionally, an archive
