Hyatt Hotels Corp. President and CEO Mark Hoplamazian began the company’s fourth-quarter and full-year earnings call by highlighting Monday’s announcement of plans to acquire all outstanding shares of Playa Hotels & Resorts for approximately $2.6 billion, inclusive of approximately $900 million of debt, net of cash. “The pending acquisition provides an opportunity for Hyatt in terms of long-term management agreements for our luxury all-inclusive Hyatt Ziva- and Hyatt Zilara-branded properties currently owned by Playa, and to expand our distribution channels, including ALG Vacations and Unlimited Vacation Club,” he told investors.
When the deal closes, the company is set to announce a new commitment to realize at least $2 billion of proceeds from asset sales by the end of 2027. This commitment may include existing assets owned by Hyatt and properties owned by Playa. The company expects its asset-light earnings mix to exceed 90 percent on a pro-forma basis in 2027. Hyatt expects to fund 100 percent of the acquisition with new debt financing, and, following the close of the transaction, the company expects to pay down more than 80 percent of that financing with anticipated proceeds from the aforementioned asset sales.
“There has been, and there continues to be, an increasing elevated level of inbound interest from institutional capital into the market,” Hoplamazian said during the call. As such, he continued, Hyatt is at an “inflection point,” having traded “just under a billion dollars’ worth of assets” that involved institutional capital from the United States. “And so we feel like the ice has been broken, so to speak, and we're optimistic that we'll see more and more investment in these kinds of assets going forward, because they're so attractive.”
Performance
Comparable systemwide growth in revenue per available room at Hyatt hotels was 5 percent in the fourth quarter and 4.6 percent for the full year of 2024 compared to the same periods in 2023.
Adjusted earnings before interest, taxes, depreciation or amortization increased 20.3 percent in the quarter compared to Q4 2023 when adjusted for the net impact of asset sales.
At the same time, the company posted a loss of $56 million for net income in the fourth quarter. For the whole year, however, net income reached nearly $1.3 billion. Adjusted net income was $40 million in the fourth quarter and $375 million for the full year of 2024
Transactions
During the quarter, the company:
- Acquired Standard International, as previously announced, on Oct. 1 for approximately $150 million and up to an additional $185 million of contingent consideration.
- Closed the Bahia Principe Transaction on Dec. 27 for €359 million (approximately $374 million). Additional deferred consideration of €60 million is payable at future dates.
- Completed the asset acquisition of three Alua properties on Nov. 15 for €117 million (approximately $123 million) and assumed $53 million of long-term debt as part of the transaction. The company intends to sell these assets and has begun the marketing process.
- Sold Hyatt Regency O'Hare Chicago for gross proceeds of $40 million on Dec. 10 to an unrelated third party and entered into a long-term franchise agreement. The company provided $20 million of seller financing and committed to loan up to $45 million for a future renovation.
- Sold its ownership interests in two unconsolidated hospitality ventures, Park Hyatt Los Cabos at Cabo Del Sol hotel and residences on Dec. 13 and Hyatt Centric Downtown Nashville on Dec. 17, and retained long-term management agreements.
Openings and Development
In the fourth quarter, 81 new hotels (or 20,721 rooms) joined Hyatt's portfolio, including properties acquired through the Standard International and Bahia Principe transactions. Notable openings included Grand Hyatt Deer Valley, Dreams Madeira Resort Spa & Marina, Park Hyatt London River Thames, Thompson Palm Springs, and nine UrCove properties.
As of Dec. 31, the company had a pipeline of executed management or franchise contracts for approximately 720 hotels (or approximately 138,000 rooms), representing pipeline expansion of approximately 9 percent year over year.
The pipeline sets “a new record for Hyatt and represents 9 percent growth when compared to the fourth quarter of 2023,” Hoplamazian said during the call.
Forecasts
- 2025 full year comparable system-wide hotels RevPAR growth is projected to increase 2 percent to 4 percent on a constant currency basis, compared to the full year of 2024
- 2025 full-year net rooms growth is projected to be 6.0 percent to 7.0 percent, compared to the full year of 2024
- 2025 full-year net income is projected between $190 million and $240 million
- 2025 full-year Adjusted EBITDA is projected between $1.1 billion and $1.15 billion