Hyatt’s Brutal Second Quarter Financial Results

Filed Under: Hyatt

It’s a tough year for the travel industry (and many other industries, for that matter). I’ve written in the past few weeks about the second quarter financial results of some major airlines. Well, this week Hyatt reported its second quarter results, and I wanted to take a look at those as well. In particular, I’m fascinated by the relative performance of different Hyatt hotel brands.

Hyatt revenue is down 89.4%

Hyatt has reported a net loss of $236 million for the second quarter of 2020, compared to a profit of $86 million during the same quarter last year (that represents a 376% decrease). Hyatt’s revenue per available room decreased by 89.4% compared to the same quarter last year, which is also brutal.

There are a few interesting highlights:

  • Revenue per available room bottomed out in April, and has increased every month since then
  • Greater China has lead the recovery for Hyatt, and hotels there were up to 57% occupancy by the end of July; excluding Hong Kong, Macau, and Taiwan, hotels there reached 65% occupancy by the end of July
  • As you’d expect, increased demand is largely from leisure travelers, rather than business travelers
  • Preliminary reports suggest that Hyatt has seen a 76% decrease in revenue per available room for the month of July
  • Despite the current situation, ten new hotels opened in the second quarter, adding a total of 1,879 rooms; there has been a 5.8% net increase in rooms compared to the second quarter of 2019

Hotels in China are seeing the fastest recovery right now

How have different hotel brands performed?

I wanted to briefly touch on some of the data I found to be most telling, as Hyatt has shared RevPAR, occupancy, and ADR. For those of you not familiar with these terms:

  • RevPAR is the revenue per available room across the hotel; it’s calculated by dividing room revenue by the number of rooms
  • Occupancy is simply the percentage of rooms that are occupied at a hotel
  • ADR is the average daily rate, or the average rate that’s paid for the rooms that are actually occupied (this doesn’t account for rooms that aren’t occupied)

Here’s a look at how performance differed across Hyatt brands:

There are a few things that stand out to me:

  • In general limited service hotels seem to be performing better in terms of revenue per available room and occupancy
  • I know a lot of people have asked why hotels aren’t discounting rates more given how empty hotels are, but this shows that rates are being discounted significantly; average daily rates are down anywhere from 27% (at Park Hyatt) to 55.5% (at Andaz)
  • Limited service hotels haven’t seen rates drop as much as upscale/luxury hotels
  • Hyatt Centric is performing the worst when it comes to revenue per available room and occupancy, and that’s probably just a reflection of these hotels mostly being located in major cities, while many people have started traveling to more rural areas

Andaz hotels saw the biggest drops in room rates

Bottom line

The hotel industry is suffering right now. Not only are people not traveling nearly as much as before, but people who are traveling are largely staying with friends and family. With a business travel rebound nowhere on the horizon, hotels have a tough road ahead of them.

Data from Hyatt shows that rates have dropped significantly, and despite that hotels are still empty. It’s not surprising that limited service hotels are doing a bit better than full service hotels right now, given the kind of travel that people are engaging in.

Are there any aspects of Hyatt’s results that surprise you?

Comments
  1. It’s probably even worse that as RevPAR is per available room, not physical rooms. If a hotel closes off a wing or block of rooms and removes them from inventory they normally aren’t included in the calculations, as not to penalize the GM / Revenue Mgmt/ and sales staff for what is out of their control.

  2. Hyatt is overpriced garbage in a shiny wrapper with a small footprint. Their business model is catering to OPM by having arguably the best elite benefits of all the programs. They’ve done a great job appealing to OPM as a “full service” hotel, and overcharging based on that premise

    Without OPM, they dont stand a chance.

  3. A bit contrary to what you’re saying, luxury properties ARE negotiating lower rates. Trust me. I have had no problem emailing directly to the hotel and securing unique discounts and upgrades to suites. You just have to work for it a bit. I’m At a Park Hyatt now where I am paying 10% off the lowest published rate and was given the largest suite in the hotel for 7 nights, as one example. All by emailing the hotel directly.

  4. @Bob

    Your comments about Hyatt hotels are strange. If that “small footprint” is big enough for a particular traveler, then the footprint is just fine. We like traveling in China/Asia, Europe, New York, Seattle, Minneapolis, Florida, Washington DC, Hawaii, Mexico and California. There are plenty of excellent Hyatt hotels in all of those places. What more footprint do we need? Your needs may be different, but your needs aren’t everyone’s.

    Why would you characterize them as overpriced? If they’re “overpriced” for a given stay, the smart money uses points. If they’re not, you pay cash. I’ve stayed in Hyatt properties in NYC for $108 a night and been upgraded to a $1000+/night suite. Excellent Hyatts in Asia can often be had for about $100 a night.

    Just off the top of my head, the Park Hyatt Shanghai, Hyatt on the Bund Shanghai, the new Hyatt Regency in Seattle, the Hyatt Huntington Beach Resort & Spa, and the NYC hotels are all beautiful. “Garbage” seems like a really silly characterization.

  5. I would guess that Andaz is in the uncomfortable middle. If I am traveling halfway around the world, am I going to cheap out $100-200 a night and stay at an Andaz, or am I going to roll in a PH?

    And that was the best of times when travel was easy. Now that there is concerns about infection control and travel is only regional (at best), would you trust the quality of a PH or an Andaz more?

  6. On the topic: if the world wants to get better, we need to stop focusing on bailouts, $1200 bundles of helicopter money, SS payroll tax cuts and lockdowns. We need to put all able unemployed people making masks. Make a mountain of masks, and make every law require them when you are in public or a shared space that is not a residence. Hell, make the masks free for everyone, since it’s a civic expectation.

    A few billion masks and a few solid laws would be a good public service right now, and a lot better way to spend another $1-3T in the US.

    Or you could be make it a political issue. That’s really working out.

  7. @Andrew

    For Hyatts, I wouldn’t rely on the brand category as the final arbiter of quality. And while the brand connotes a certain experience, that doesn’t mean you’ll like the fanciest brand the best in a given place.

    In Shanghai the Park Hyatt epitomizes modernity and cool: it’s a great hotel, and feels like you’re traveling 50 years into the future. But I don’t like Shanghai’s Park Hyatt nearly as much as the Hyatt on the Bund right across the river. There is a friendliness and vitality to the Hyatt on the Bund that I prefer, and as someone who likes to run, its location is much better.

    The aesthetic seems to be true of many Park Hyatts: they’re minimalist and discreet, but often located in out-of-the-way locales that aren’t all that interesting to tourists. Hangzhou is another place where the Grand Hyatt (on West Lake) seems like a way better experience than the Park Hyatt, which is in a business district.

    The Andaz on 5th in NYC feels anything but cheap — it seems like an aspirational brand to me, and is often priced way more than $100-$200/night.

  8. Well in NYC even if the Andaz in 5th feels “aspirational” it pales in comparison to the nearby Park Hyatt, which is much more luxurious.

  9. @Pete NYC Park Hyatt is running about $1000/night right now for a standard room. Andaz 5th Avenue is less than half that. If it were me I’d rather spend the ~$600+ difference on a luxurious meal, luxurious Broadway tickets, luxurious cab rides or some luxurious Ionis Pharmaceuticals stock.

    Joking aside, some of the best Hyatt luxury hotel deals in NYC may be to buy or figure out a way to get upgraded to a large suite at one of the bigger hotels (e.g. the Grand Hyatt, whenever it reopens.) It depends what experience you are looking for.

  10. Resorts should be getting hammered since many of the amenities are gone or not going to be used by most people. Hanging around a nice indoor bar? Nope. Indoor dining? Only when necessary. Swimming pools? Not so much. Spas? Nope. Etc.

    Sure some people will assume those risks but the vast majority won’t and a simple clean room elsewhere for a low rate works just as well.

    I’m not sure what the Hyatt at Gainey Ranch is doing but previously when I’ve been around there (used to go walking nearby but when it is 110, 117 for highs, my walking ends) the hotel was pretty vacant even after it reopened.

    Well, better luck next year.

  11. @Rich
    I guess it depends on the resort, and its location. We’ve stayed at the Hyatt Huntington Beach Resort & Spa a few times in the last few weeks. The “amenity” of the beach and Pacific Ocean right across the PCH is still a big draw. And the pools have been as packed as social distancing will allow, with people ordering a lot of expensive food and drink from the pool service (they bring everything wrapped in a paper bag, LOL). The hotel looked like it was near capacity on the days we went.

    Resorts that depend on a lot of indoor activity or their proximity to, say, closed amusement parks are probably not faring so well.

  12. Lucky, on a technical note, an (89.4%) decline in RevPAR does not equate to (89.4%) drop in revenue.

    In fact, you can assume that revenue dropped even more than that, since the denominator (available rooms) are likely lower since many hotels have been closed because of the pandemic

  13. Lucky, is the limited time IHG-Chase points transfer bonus (60% bonus) until Aug 31st a good deal?

  14. It’s hard to tell what is wrong, but this is a very strange situation. You are a travel blogger who has been travelling for several weeks but refusing to tell your readership anything about those travels. For months you had to endure a forced reduction in your content, and now you are travelling again you are still filling the days with points and hotel promotions and card reviews.
    You are an excellent writer and it’s your blog so you can post whatever you like, but honestly it’s a little bizarre that you’re acting like there is no travel when you could be letting people know about travel experiences in the current climate.
    Hopefully everything is ok for you and you can soon get back to posting your own content and connecting with your readers.

  15. The obvious hit that Hyatt is taking, and no one is mentioning, is because Hyatt has so few Hyatt Houses (and so few nice ones). The extended stay category is the one hotel category that has held up pretty well.

    I’m staying in a Staybridge today. The hotel is running at about 45% occupancy, higher on weekends, and even with the discount rates it is still looking to get back into the black this month.

    Hyatt really, really needs a new team in charge of brand differentiation. All these interchangeable Grands, Regencies, Centrics etc are obviously not serving Hyatt well, and it’ll just get worse with all the new JdVs.

    I find it interesting that the JdV hotels are not included in the chart.

  16. I think Lucky is holding back his reviews for privacy reasons. He’s doing a pretty long term stay in Turkey, and chances are he’ll still be at the property he’s reviewing if he publishes the reviews immediately, hence we’re seeing a significant delay. (This wasn’t a problem before since he doesn’t really stay long term at any property)

    You guys need to give the man a little space lol…

  17. I’m not surprised full service hotels are struggling more. With chain hotels switching to pretty much no-service across all brands, there’s very little incentive to pay extra for a full-service hotel. There’s just no value, I’d rather choose a larger room in a chepaer hotel, as I get the same (none) service anyway.

    I’m currently planning a staycation in Prague and I was looking into booking Hilton but upon reading about all the restrictions they have in place, I realised it’s not worth the price, even despite their fairly low rates at the moment. I can get a local property for half a price and with proper service instead.

  18. I feel sorry for the billionaire Pritzker family. How will they make ends meet?

    Meanwhile, let’s cut off that extra $600 per week the maids, cooks, desk and waitstaff get. They need to try new occupations, like nanotech or drones.

  19. As one of the very few to have some long term travel work right now (6 weeks in 5 cities) between July and August, I can say with certainty that prices are way down in general. I have complete flexibility with my choices and get reimbursed. Everyone has different needs and goals from their work travel, and I have often changed hotel chains for a variety of reasons.

    I was pretty fixed on going out of my way to do all IHG stays for their 4x promo and to rack up a ton of points, but then Hilton said they would count all nights this year towards next year’s status, and with prices down so low I’ve been able to book their 2x nightly point rates to go along with promos and other point earnings.

    Hyatt just hasn’t fit my travel patterns in a few years. Finding Hilton properties in Alexandria near DC for average rates under $150 (including tax) and Buckhead Atlanta region is pretty insane for people who know these areas.

    For me, the biggest downside to hotel stays has been the food offerings. Most places I’ve been have had no good breakfast options. I stayed at a full service Hilton in Columbus, OH that was giving a cold bagel and cream cheese with bagged muffin and orange juice/coffee. The Homewood Suites I stayed at was similar for breakfast and evening reception was a few choices at best. My co worker who likes Marriott properties was given a bagged breakfast with 2 old looking pieces of fruit at a Renaissance, and the Fairfield he stayed at was advertising IHOP as their breakfast option on the website, but when he arrived they said it was not offered, ebve though Ihop was open.

    We all understand the new precautions. It is something to consider for anyone who travels now – look ahead, read the website, and call to speak to a front desk employee if you want to know what is really going on.

  20. Make sure the calculation of metrics is fully understood, some jurisdictions such as California are requiring rooms to be empty for 72 hours after a room has been used, are those nights being included in the ADR calculation? On a 1 night $400 stay that becomes a $100 ADR

  21. Hyatt Regency in Hakone seems to be doing ok. Keeping in mind they are limiting occupancy to 50%, it is sold out for this Friday. We are staying Saturday to Tuesday, so we will see how it is on weekdays. We will stay at the Park Hyatt in Niseko in early September for about $200/night in a suite. Overall that seems like a bargain.

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