Hyatt Hotels’ Earnings Call: Growth Amid Challenges

Hyatt Hotels ((H)) has held its Q3 earnings call. Read on for the main highlights of the call.

Hyatt Hotels’ recent earnings call reflected a balanced sentiment, highlighting both promising growth indicators and notable challenges. The company reported strong growth in net rooms and an expanding loyalty program, alongside strategic partnerships. However, challenges such as RevPAR growth and restructuring costs were also acknowledged. Despite these hurdles, there is optimism for future events and strategic initiatives.

Net Rooms Growth and Development Pipeline

Hyatt Hotels achieved impressive net rooms growth of over 12% during the quarter, with the development pipeline increasing by more than 4% year over year. This growth was marked by notable openings such as Park Hyatt Kuala Lumpur and Park Hyatt Johannesburg, underscoring the company’s expansion efforts.

Expansion of Loyalty Program

The World of Hyatt loyalty program saw a significant milestone, surpassing 61 million members, which marks a 20% year-over-year increase. This achievement positions it as the fastest-growing major global hospitality loyalty program, contributing to Hyatt’s competitive edge in the market.

Positive Outlook for 2026

Looking ahead, Hyatt has a positive outlook for 2026, with group pace for full-service U.S. hotels projected to rise in the high single digits. Special events like the World Cup and America 250 celebrations are expected to provide a substantial boost to the company’s performance.

Sale and Asset-Light Strategy

Hyatt is progressing with its asset-light strategy, aiming to exceed a 90% asset-light earnings mix. This includes several planned property sales, such as the Playa Hotels & Resorts transaction, which aligns with the company’s strategic focus on reducing asset ownership.

Strong Performance in All-Inclusive Segment

The all-inclusive segment demonstrated strong performance, with net package RevPAR growing by 7.6% in the third quarter. This growth reflects the robust demand for luxury all-inclusive travel, a key area of focus for Hyatt.

Chase Credit Card Agreement

Hyatt’s expanded agreement with Chase is set to significantly enhance its economics. The adjusted EBITDA from the credit card partnership is projected to grow to approximately $105 million by 2027, highlighting the financial benefits of this collaboration.

RevPAR Growth Challenges

Despite overall growth, Hyatt faced challenges with system-wide RevPAR, which grew by only 0.3% for the quarter. This was impacted by holiday shifts and the lapping of one-time events from the previous year, presenting a hurdle for the company.

Decline in U.S. RevPAR

RevPAR in the United States declined by 1.6% year over year, primarily due to select service hotels and holiday timing. This decline highlights the challenges faced in the domestic market.

Group RevPAR Decline

Group RevPAR saw a decline of 4.9%, attributed to difficult year-over-year comparisons, including major events like the Olympics and the Democratic National Convention, which had previously boosted performance.

G&A Restructuring Charges

Hyatt anticipates incurring approximately $50 million in restructuring charges for the year, with the majority recorded in the third quarter. These charges are part of the company’s efforts to streamline operations and enhance efficiency.

Forward-Looking Guidance

Looking forward, Hyatt provided several key metrics and guidance. The company expects system-wide RevPAR to grow by 0.3% for the quarter, with luxury brands seeing a 6% increase in leisure transient RevPAR. The all-inclusive portfolio’s net package RevPAR is anticipated to rise by 7.6% compared to the previous year. For the fourth quarter, group pace is expected to increase by approximately 3%, with full-service U.S. hotels anticipated to deliver higher growth. Additionally, Hyatt is on track for net rooms growth of 6.3% to 7% for the full year, excluding acquisitions, and anticipates adjusted EBITDA to be between $1.09 billion and $1.11 billion.

In conclusion, Hyatt Hotels’ earnings call presented a balanced view of the company’s current performance and future prospects. While there are challenges in RevPAR growth and restructuring costs, the company is optimistic about its strategic initiatives and future events. Key takeaways include strong net rooms growth, an expanding loyalty program, and a positive outlook for 2026, all of which position Hyatt for continued success in the hospitality industry.