Hyatt Hotels Corporation (H) reported its third-quarter earnings on Thursday, showcasing a mixed bag of results. While the company exceeded revenue expectations, it fell short on earnings per share estimates, leading to a dip in the stock price.
Strong Revenue Growth, But EPS Falls Short
Hyatt’s total revenue for the third quarter reached $1.629 billion, surpassing the consensus estimate of $1.574 billion. This positive performance was driven by a 3.0% increase in comparable system-wide hotels RevPAR (revenue per available room) compared to the same period in 2023. However, the company’s adjusted earnings per share came in at 94 cents, missing the anticipated $1.38. This shortfall likely contributed to the stock’s decline.
Growth in Rooms, Pipeline, and Membership
Despite the earnings miss, Hyatt demonstrated positive signs of growth. The company added 16 new hotels (or 2,589 rooms) to its portfolio during the quarter, bringing the total net rooms growth to approximately 4.3%. Additionally, Hyatt’s pipeline expanded by 10% year-over-year, reaching approximately 135,000 rooms. This signifies the company’s commitment to future expansion. Furthermore, the World of Hyatt membership base grew by 22% year-over-year, reaching 51 million members, indicating strong customer engagement.
Financial Strength and Dividend Announcement
Hyatt emphasized its financial strength, reporting total liquidity of approximately $2.6 billion, including $1.134 billion in cash and equivalents and short-term investments. While the company holds a total debt of $3.142 billion, it declared a cash dividend of $0.15 per share for the fourth quarter of 2024, payable on December 6.
Outlook for 2024
Looking ahead, Hyatt anticipates a year-over-year increase of 3% – 4% in system-wide hotels RevPAR for fiscal year 2024. The company also projects net rooms growth of 7.75% to 8.25%. This positive outlook suggests that Hyatt remains optimistic about its future performance despite the recent earnings miss.
Stock Performance
Following the earnings release, H shares experienced a significant decline, trading down by 4.42% to $150.16 at last check Thursday. The stock’s reaction reflects investor concerns regarding the earnings miss and its implications for the company’s future profitability.
In Conclusion
Hyatt Hotels Corporation delivered mixed third-quarter results. While revenue growth exceeded expectations, the earnings miss and subsequent stock decline highlight the challenges the company faces in navigating the current economic environment. However, with a robust pipeline, increasing membership, and positive outlook for 2024, Hyatt continues to demonstrate its commitment to long-term growth and shareholder value.
