by Michael J. Shapiro | May 04, 2018
Hyatt Hotels reported strong first-quarter financial results, thanks in no small part to last-minute group bookings. "Results exceeded our expectations by a meaningful amount, with much of the strength for the quarter materializing in the month of March, where we enjoyed strong performance at our resorts and stronger-than-expected group business resulting from in-the-year, for-the-year bookings," noted Hyatt CFO Patrick Grismer in an earnings call.
Those short-term group bookings were up by 4 percent over the first quarter last year. The surge wasn't enough to halt a slight drop in group rooms revenue, however, which dipped by a bit more than 1 percent for the quarter. Hyatt blames the year-over-year drop on Easter timing, which negatively affected both group room nights and group rate. Nevertheless, the company is forecasting a low-single-digit increase to group revenue for the year.
"We are well-positioned on group business for the year," Grismer added, "and optimistic based on the momentum seen in March. As we look ahead, the pace for all years is up, with now 53 percent of our targeted 2019 U.S. group business already on the books at the end of the quarter."
There's a lot to like about the way group business is trending, according to Mark Hoplamazian, Hyatt's CEO. "As I look at the quarter, there are really three things that stand out on the group side to me," he said during the call. "One is the strength of short-term demand. The second is the strength of corporate. And the third is incentive business. On the short-term-demand front, we had a very positive progression in both in-the-quarter for-the-quarter, and in-the-quarter for-the-year bookings."
It's the second consecutive quarter that Hyatt has enjoyed increases to both of those metrics -- something that hasn't happened since the third and fourth quarters of 2015, Hoplamazian added.
Association business was down for the quarter, Hoplamazian continued, but corporate business held up exceptionally well, particularly given the Easter holiday shift and the fact that the presidential inauguration occurred in the first quarter last year. "When I combine those two things and I see corporate holding up as it has, I find that notable," he said.
The company also is seeing promising signs for its incentive business. "Our banqueting and F&B spend per occupied group room night has continued to be robust in our resorts, in particular," Hoplamazian said. "And that's notable because resort group business is typically more oriented toward incentive groups... It definitely feels that incentive-trip activity is improving." That trend is further substantiated by conversations Hoplamazian has had with a number of key customer CEOs, he pointed out.
Solid increases in Hyatt's overall occupancy and average daily rate fueled a 4.3 percent increase in systemwide revenue per available room for the first quarter. The company continues to grow as well, reporting 7.2 percent net-rooms growth for the quarter - the 12th consecutive quarter that Hyatt's net-rooms growth has exceeded 6 percent year-over-year. The company has another 73,000 rooms in the pipeline, representing a year-over-year increase of more than 10 percent.
Hyatt updated its full-year outlook, again driven in part by positive group-business trends. The company now is forecasting RevPAR growth of 2 to 3.5 percent for the year and net-rooms growth between 6.5 and 7 percent.