Hyatt Hotels's second-quarter comparable systemwide revenue
per available room declined 89.4 per cent year over year to US$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
per cent for the former and the low 90s for the two higher tiers. Occupancy for
upscale brands averaged 22 per cent, compared with 9 per cent and 11.7 per cent,
respectively, for upper-upscale and luxury.
Occupancy for the second quarter was down 63 percentage
points year over year to 13.5 per cent. For the half year, it was down 40.5
percentage points to 32.4 per cent. Average daily rate was down 39.8 per cent
to $111.26. For the half-year, it was down 10.7 per cent to $164.62.
Net rooms grew 5.8 per cent, with ten new hotels,
representing 1,879 rooms, opened in the second quarter. The Americas net rooms
grew by 4.5 per cent year over year. The outlook for rooms growth for 2020
could be more in the 4 to 4.5 per cent range as opposed to the 6.5 to 7 per cent
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 per cent by the end of July. Excluding Hong
Kong, Macau and Taiwan, occupancy in China reached approximately 65 per cent by
31 July.
Hoplamazian added that Hyatt has also seen some business
transient return in China, and that segment now represents more than 25 per cent
of total demand in the region. Some group business also returned in China in
July, with hosted product launches from BMW, Volvo and Gucci in Hyatt hotels.
"We are encouraged by this across the board," he said.
Testing meetings in North America
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 per cent year over year to $7.29.
Select-service hotel RevPAR was down 81.2 per cent to $21.22. Occupancy for
full and select-service properties was down 74 percentage points to 5.2 per cent
and 57.7 percentage points to 21.6 per cent, respectively. In addition,
Hoplamazian said that the booking window has shortened substantially to just four
days ahead of the date of stay for the US. "This is the shortest transient
booking window we have seen," he said.
European picture
In the EMEA and Southwest Asia region, RevPAR for full-service hotels fell 93.9
per cent year over year to $7.81, and down 80.2 per cent to $12.99 for select
service properties. Occupancy was down 60.6 percentage points to 6.4 per cent
for full-service hotels and 57.8 percentage points to 14.6 per cent for select
service hotels. As of 30 June, 61 per cent of Hyatt’s full and select-service
properties in EMEA and Southwest Asia had reopened, while net rooms in the
region increased 6.7 per cent year on year.
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 modelling including US 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 per cent opened at the end of June and approximately 87 per cent
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 US and
Canada, and it extended its flexible cancellation policy through July 2021.