Leisure travelers will lead recovery, Hyatt says

About a third of properties operated by Hyatt Hotels Corp. are closed as a result of the COVID-19 pandemic and two-thirds of employees are on furlough or placed on leave, CEO Mark Hoplamazian told analysts Thursday in the company’s quarterly earnings call.

Operations are suspended at 62% of full-service hotels but only 19% of select-service hotels in the Americas, according to the company. Hoplamazian said that 103 employees have tested positive for the virus and six have died.

Most business in the U.S. is coming from airline crews at airport hotels, as well as from government, military and health care workers in transit. Hoplamazian told analysts that Hyatt had amended terms of its lending agreements so that it has 30 months of liquidity.

The China market has rebounded — while 26 hotels were shut earlier this year, only one is fully closed. Occupancy was about 25% in April, CFO Joan Bottarini said. South Korea also is coming back as bookings recently have doubled.

Chicago-based Hyatt reported a first-quarter net loss of US$103 million, compared with net income of US$63 million, or 59 cents a share, in the first three months of 2019. Comparable systemwide RevPAR fell 28.1%, including a decrease of 25.8% at comparable owned and leased hotels.

Outside of the Americas, 17% of hotels in the Asia Pacific were closed as of late April, as were 58% of properties in Europe, Africa, the Middle East and Southwest Asia. Revenue fell to US$993 million from US$1.2 billion in the same period last year. (Read the full report here.) 

Return of leisure travel

Hoplamazian said he expects leisure demand to recover first, especially in areas when guests can drive to a hotel rather than fly, followed by business travel.

“Group meetings will be the slowest to recover,” he said. “We’ve had cancellations in the first half, and the second half of the year is at risk.” He said he expected an improvement by 2021. Associations and groups may be more reluctant to fully cancel, and Hyatt is working with those clients to develop partly virtual meetings.

Recovery will vary by market and hinge on development of a vaccine. But Hoplamazian said he sees pent-up demand and “resurgence at a high level,” when confidence to travel resumes. And he noted that Hyatt’s customer base of high-end travelers is relatively less financially constrained.

The company’s pipeline of scheduled openings may be slightly delayed, depending whether local construction has been suspended because it’s not considered an essential service. The hotelier started the year planning to open about 80 properties, and there “could be slippage” among 10 of those, Hoplamazian said.

Early this year, Hyatt ramped up its safety and cleaning standards, in line with protocols of the World Health Organization and the Centers for Disease Control and Prevention. The chain initiated an accreditation process through the Global Biorisk Advisory Council, and Hoplamazian said he believes the company is the first hotelier to commit to independent accreditation. It is establishing protocols for group meetings and every hotel will have the position of a hygiene manager.