Hyatt Reports First Quarter 2022 Results

CHICAGO (May 13, 2022) – Hyatt Hotels Corporation (“Hyatt” or the “Company”) (NYSE: H) today reported first quarter 2022 financial results. Net loss attributable to Hyatt was $73 million, or $0.67 per diluted share, in the first quarter of 2022, compared to a net loss attributable to Hyatt of $304 million, or $2.99 per diluted share, in the first quarter of 2021. Adjusted net loss attributable to Hyatt was $36 million, or $0.33 per diluted share, in the first quarter of 2022, compared to Adjusted net loss attributable to Hyatt of $363 million, or $3.57 per diluted share, in the first quarter of 2021.

“We are optimally positioned at this stage in the recovery as demonstrated by the momentum in our results this quarter,” said Mark S. Hoplamazian, President and Chief Executive Officer of Hyatt Hotels Corporation. “Record levels of leisure demand fueled nearly 60% of our rooms revenue in the quarter with continued outperformance at our resorts and all-inclusive properties. We expect the rate of recovery to broaden and strengthen in the months ahead as evidenced by the strong pace of actualized and future bookings for business and group travel. Our outlook remains very optimistic for the remainder of the year with system-wide RevPAR in April accelerating further from March.”

First quarter 2022 financial results as compared to the first quarter 2021 are as follows:

• Net loss decreased to $73 million from a loss of $304 million.
• Adjusted EBITDA increased to $169 million from a loss of $20 million.
  • Apple Leisure Group (“ALG”) contributed $56 million of Adjusted EBITDA.
  • Adjusted EBITDA does not include ALG’s Net Deferrals of $24 million and Net Financed Contracts of $7 million.
• Comparable system-wide RevPAR increased 107% to $93.98 and comparable U.S. hotel RevPAR increased 126% to $104.45 in the first quarter of 2022.
• Comparable owned and leased hotels RevPAR increased 217% to $143.50 and comparable owned and leased hotels operating margin improved to 26.9% in the first quarter of 2022.
• All-inclusive Net Package RevPAR was $204.66 with an Average Daily Rate of $309.90.
• System-wide Net Rooms Growth was 18.6% in the first quarter of 2022. Excluding the acquisition of ALG, Net Rooms Growth was 5.2%.
• Pipeline of executed management or franchise contracts increased 13% to approximately 113,000 rooms. Excluding the acquisition of ALG, the pipeline increased 5% to approximately 105,000 rooms.

Mr. Hoplamazian continued, “We have made significant progress towards our new $2.0 billion asset disposition commitment we announced last year. In April of this year, we closed on the sale of three owned hotels and expect to close on the sale of a fourth hotel in the second quarter. Combined, the disposition of these four hotels results in $812 million in expected gross disposition proceeds, or over 40% of our $2.0 billion disposition target, at an implied multiple of 15.7x 2019 EBITDA, marking significant progress towards our fee-based earnings transformation.”

OPERATIONAL UPDATE

Comparable system-wide RevPAR progressed meaningfully during the first four months of the year, January was 37% below 2019 and improved to 9% below 2019 in April. The Americas and EAME/SW Asia regions exceeded 2019 RevPAR in April by 3% and 1%, respectively. System-wide average daily rate exceeded 2019 by approximately 10% in April driven by luxury brands in the Americas, which exceeded 2019 by approximately 30%.

Forward booking trends also continue to strengthen. System-wide comparable gross transient revenue booked for future periods was approximately 1% below 2019 in April or approximately 6% above 2019 when excluding Greater China. Gross group room revenue booked for stay dates in 2022 for comparable Americas Full Service Managed properties was 42% above 2019 in April.

Net Package RevPAR for ALG resorts in the Americas, in comparison with the same properties managed by ALG in the first quarter of 2019, was 12% above 2019 in April. Gross package revenue booked for ALG resorts in the Americas for future periods was more than 33% above 2019 in April for the same set of properties.

FIRST QUARTER RESULTS

First quarter of 2022 financial results as compared to the first quarter of 2021 are as follows:

Management, Franchise, and Other Fees

Total management and franchise fee revenues increased to $135 million in the first quarter of 2022 compared to $49 million reported in the first quarter of 2021 and reflected a sequential improvement from $124 million reported in the fourth quarter of 2021. Base management fees increased to $60 million, incentive management fees increased to $40 million, and franchise fees increased to $35 million during the quarter compared to the first quarter of 2021. Other fee revenues increased to $19 million during the quarter compared to the first quarter of 2021.

Americas Management and Franchising Segment

Americas management and franchising segment Adjusted EBITDA increased to $85 million in the first quarter of 2022 compared to $28 million reported in the first quarter of 2021. Results were led by increases in base management and franchise fees, with franchise fees exceeding 2019 levels by 9% on a reported basis.

Americas net rooms increased 4.0% compared to the first quarter of 2021.

Southeast Asia, Greater China, Australia, New Zealand, South Korea, Japan and Micronesia (ASPAC) Management and Franchising Segment

ASPAC management and franchising segment Adjusted EBITDA of $5 million in the first quarter of 2022 was flat compared to $5 million reported in the first quarter of 2021. Results reflect lower demand from Greater China while the remainder of the region experienced improving demand and an increase in management fees.

ASPAC net rooms increased 6.1% compared to the first quarter of 2021.

Europe, Africa, Middle East and Southwest Asia (EAME/SW Asia) Management and Franchising Segment

EAME/SW Asia management and franchising segment Adjusted EBITDA increased to $6 million in the first quarter of 2022 compared to $0 million reported in the first quarter of 2021. Results across the region were led by increases in base and incentive management fees in the Middle East and Western Europe.

EAME/SW Asia net rooms increased 9.7% compared to the first quarter of 2021.

Apple Leisure Group Segment

ALG segment Adjusted EBITDA was $56 million in the first quarter of 2022. Adjusted EBITDA does not include ALG’s Net Deferrals of $24 million and Net Financed Contracts of $7 million. Results reflect strong demand for leisure destinations in Mexico and the Caribbean, a strong level of booking activity, and favorable operating margins within the ALG Vacations business.

During the first quarter of 2022, ALG added 3 resorts (or 1,071 rooms).

Owned and Leased Hotels Segment

Owned and leased hotels segment Adjusted EBITDA increased to $54 million in the first quarter of 2022 compared to $(29) million reported in the first quarter of 2021 driven by improved demand across the portfolio. Owned and leased hotels segment comparable operating margins improved to 26.9%, up 210bps from the fourth quarter 2021 as reported, reflecting strong operational execution and growth in average daily rates.

Corporate and Other

Corporate and other Adjusted EBITDA decreased to $(38) million in the first quarter of 2022 compared to $(24) million reported in the first quarter of 2021. The decrease to the first quarter of 2021 is driven by increases in certain selling, general, and administrative expenses, including $7 million of integration-related costs associated with the acquisition of ALG, and increases in payroll and related costs due to increased headcount.

Selling, General, and Administrative Expenses

Selling, general, and administrative expenses increased 16.8% inclusive of rabbi trust impacts and stock-based compensation. Adjusted selling, general, and administrative expenses increased $54 million, primarily due to the addition of ALG Adjusted selling, general, and administrative expenses which were $33 million in the first quarter of 2022.

OPENINGS AND FUTURE EXPANSION

In the first quarter of 2022, 13 new hotels (or 2,690 rooms) joined Hyatt’s system.

As of March 31, 2022, the Company had a pipeline of executed management or franchise contracts for approximately 540 hotels (approximately 113,000 rooms), inclusive of ALG’s pipeline contribution of approximately 30 hotels (or approximately 8,000 rooms).

TRANSACTION / CAPITAL STRATEGY

The Company intends to successfully execute plans to sell approximately $2 billion of real estate by the end of 2024 as part of its expanded asset-disposition commitment announced in August 2021.

During the three months ended March 31, 2022, the Company made progress on its asset disposition commitment by signing purchase and sale agreements for the following owned hotels which subsequently closed in April: Hyatt Regency Indian Wells Resort & Spa, Grand Hyatt San Antonio River Walk, and The Driskill. The Company sold these three assets to unrelated third parties and entered into long-term management agreements for each property. The Company also signed a purchase and sale agreement in May for The Confidante Miami Beach, which is expected to close in the second quarter.

The aggregate proceeds for these four transactions is expected to be $812 million, representing over 40% of the Company’s asset disposition commitment.

SHARE REPURCHASE / DIVIDEND

There were no Class A or Class B shares repurchases or quarterly dividend payments during the first quarter of 2022. The Company ended the first quarter with 51,273,148 Class A and 59,017,749 Class B shares issued and outstanding.

2022 OUTLOOK

The Company is revising the following information for the 2022 fiscal year:

• Capital expenditures are expected to be approximately $210 million.
  • Hyatt capital expenditures, excluding ALG, are expected to be approximately $185 million reflecting a reduction from $190 million as a result of owned hotel dispositions.
  • ALG capital expenditures are expected to remain at approximately $25 million.

The Company is reaffirming the following information for the 2022 fiscal year:

• Adjusted selling, general, and administrative expenses are expected to be approximately $460 million to $465 million. This includes selling, general, and administrative expenses associated with the acquisition of ALG, of which $25 million to $30 million is related to one-time integration costs in 2022.
  • Excluding ALG, Adjusted selling, general, and administrative expenses are expected to be approximately $300 million to $305 million, and include $25 million to $30 million related to one-time integration costs in 2022.
  • ALG Adjusted selling, general, and administrative expenses are expected to be approximately $160 million.

• The Company expects to grow net rooms by approximately 6.0%.

No disposition or acquisition activity beyond what has been completed as of the date of this release has been included in the 2022 Outlook. The Company’s 2022 Outlook is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that Hyatt will achieve these results.

BALANCE SHEET / LIQUIDITY

As of March 31, 2022, the Company reported the following:

• Total debt of $3,821 million.
• Pro rata share of unconsolidated hospitality venture debt of $593 million, substantially all of which is non-recourse to Hyatt and a portion of which Hyatt guarantees pursuant to separate agreements.
• Total liquidity of appy $2.8 billion with $1,305 million of cash and cash equivalents and short-term investments, and borrowing availability of $1,496 million under Hyatt’s revolving credit facility, net of letters of credit outstanding.