Hyatt Hotels and Choice Hotels International both reported their quarterly results today.
Hyatt
In reporting quarterly results, Hyatt President and CEO Mark Hoplamazian said, “Our business continues to have good momentum and we believe we’re well-positioned for continued growth in 2017. In 2016, adjusted EBITDA grew approximately 5%, fueled by systemwide comparable RevPAR growth of 2.5%. Excluding the impact of foreign exchange, adjusted EBITDA grew approximately 6%. For 2017, we expect systemwide comparable RevPAR growth of approximately 0% to 2% and Adjusted EBITDA growth of approximately 3% to 7%, in constant currency and before the impact of transactions.”
Net income attributable to Hyatt was $41 million, or $0.31 per diluted share, in the fourth quarter of 2016, compared to $37 million, or $0.26 per diluted share, in the fourth quarter of 2015.
Adjusted net income attributable to Hyatt was US$39 million, or US$0.29 per diluted share, in the fourth quarter of 2016, compared to US$30 million, or US$0.21 per diluted share, in the fourth quarter of 2015.
Here are fourth quarter 2016 financial results compared with the fourth quarter of 2015:
• Net income increased 10.8% to US$41 million.
• Adjusted EBITDA decreased 3.9% to US$172 million, down 2.3% in constant currency.
• Comparable systemwide RevPAR increased 2.0%, including a decrease of 0.3% at comparable owned and leased hotels.
• Comparable U.S. hotel RevPAR increased 2.4%; full service and select service hotel RevPAR increased 2.0% and 3.5%, respectively.
• Comparable owned and leased hotels operating margin decreased 230 basis points to 22.3%.
Fiscal year 2016 financial results as compared to fiscal year 2015 are as follows:
• Net income increased 64.5% to US$204 million.
• Adjusted EBITDA increased 4.7% to US$785 million, up 6.2% in constant currency.
• Comparable systemwide RevPAR increased 2.5%, including an increase of 2.2% at comparable owned and leased hotels.
• Comparable U.S. hotel RevPAR increased 3.3%; full service and select service hotel RevPAR increased 2.6% and 5.4%, respectively
Baird Equity Research’s Michael Bellisario wrote: “Overall, Hyatt’s 4Q16 results are generally in line with our expectations (adjusted for the US$7 million credit card-related charge taken in the quarter). Positively, share repurchase activity resumed, but we expect investors to focus on Hyatt’s increased capex spending in 2017 and the associated returns on this capital.”
“Comp owned and leased RevPAR of -0.3% was weaker than our +1.0% forecast” wrote SunTrust Robinson Humphreys’ Patrick Scholes. “Owned margins were very weak at -230 bps. and were hurt by Hyatt’s group rooms revenue down 1.5% y/y — group business represents approximately 50% of revenues for Hyatt. Hurting group results was the negative impact of the timing of Jewish holidays.”
Choice Hotels International
Choice also reported its fourth-quarter and year-end results. Net income for the fourth quarter of 2016 was US$31.8 million or US$0.56 per diluted share, compared with US$29.2 million or US$0.51 per diluted share for the fourth quarter of 2015. Fourth quarter adjusted earnings before income taxes, depreciation and amortization (EBITDA) was $56.0 million, compared with US$50.6 million in the prior year, an increase of 11%.
“We are pleased to report another record year of revenue, operating income and net income performance. 2016 was a strong year for Choice Hotels highlighted by our domestic RevPAR growth which continues to outpace industry performance and strong development results,” CEO Stephen Joyce said. “There are many contributing factors to our success highlighted by our efforts to deliver new strategic programs and tools designed to increase reservation delivery to our franchisees, the acceleration of our growth and performance in the upscale category, and our strong development momentum. We are optimistic that our expanded programs and services will result in continued strong RevPAR performance and developer interest in 2017 and beyond.”
Overall results:
- Diluted earnings per share (EPS) for the fourth quarter totaled US$0.56, an increase of 10% from the comparable period of the prior year, and increased 11% for the full year to US$2.46; excluding executive termination benefits, full year adjusted diluted EPS increased 12% over the prior year.
- Net income totaled US$31.8 million for the fourth quarter and US$139.4 million for the full year.
- Adjusted EBITDA from hotel franchising activities for the fourth quarter increased 8% from the prior year fourth quarter to US$61.4 million and increased 7% to US$273.3 million for the full year.
- Adjusted hotel franchising margins for the fourth quarter increased 110 basis points from the prior year fourth quarter to 64.4%, and increased 90 basis points to 68.2% for the full year.
SunTrust’s Scholes wrote that the copany’s EBITDA of US$56.0 million was below its US$57.1 million projection and the consensus of US$57.8 million; but the company’s first quarter outlook is strong: “1Q RevPAR of +3.5%-4.5% is well north of the +2.0% we modeled.”