Hyatt Hotels Corporation’s Investor Day took place on 11th May 2023. The company highlighted the strategic actions it has undertaken, as well as its plans to build on its strong momentum to drive further expansion and shareholder value.
Hyatt has strategically transformed its portfolio so as to become the premier brand for the high-end guest in each segment that it serves. It has increased its mix of luxury, lifestyle, and resort rooms to 44% of the portfolio in 2022, vs. 32% in 2017.
The acquisitions of Miraval, Two Roads Hospitality, Apple Leisure Group, and Dream Hotel Group since 2017 have significantly increased Hyatt’s brand presence in the fast-growing categories of all-inclusive, lifestyle, and well-being.
In 2Q 2023, the company also expects to close the acquisition of Mr & Mrs Smith, thus expanding its luxury offer.
Hyatt is strategically expanding its portfolio in the upper-midscale and upscale segments. This includes the recent announcement of the Hyatt Studios brand.
Since 2017, the company has increased its number of loyalty members by 260%.
Part of Hyatt’s strategy is its decision to position itself as an asset-light company. It has launched and scaled several new brands and acquired asset-light, high-growth platforms. At the same time, it has monetised a large portion of its owned and leased assets.
Since the company’s initial public offering in 2009, Hyatt has tripled its number of hotels, nearly tripled the number of hotel rooms, and quadrupled the number of pipeline rooms. It has also grown annual free cash flow to $473 million in 2022 from $60 million in 2009 and increased the percentage of asset-light earnings mix to 75% from 37%.
By continuing with this strategy, Hyatt has mapped out a path to $750 million in free cash flow and more than 80% asset-light earnings mix by 2025.
The company anticipates the generation of approximately $3.0 billion of cash through the combination of Free Cash Flow and net cash generated from asset dispositions cumulatively from 2023 to 2025.
The company’s quarterly dividend as been reintroduced as part of its to deploy this cash to continue investing in high-growth, asset-light platforms and to return capital to shareholders.
It will take the form of a cash dividend of $0.15 per share for the second quarter of 2023, payable on 12th June 2023 to shareholders of record as of 30th May 2023.
Furthermore, the company also announced a $1,055 million expansion in its share repurchase authorisation, resulting in a $1.5 billion total repurchase authorisation.
Key figures from this revision include a system-wide RevPAR of 16%, net rooms growth of 6%, adjusted EBITDA of $1,020-$1,070 million, and net income of $225 million.
Over the past several years, we have taken decisive actions to drive faster and more profitable growth by positioning Hyatt to become the preferred brand for the high-end traveller in each segment that we serve. We have launched and scaled new brands in high-growth segments, acquired asset-light, fee-based platforms with a focus on Luxury, Lifestyle and Resort, and invested in digital capabilities, all through a culture of agility and underpinned by our purpose. Taken together with the successful sell-down of a significant portion of our owned and leased assets, we believe we have great business momentum driving industry leading growth in rooms, fee revenue, and loyalty membership. We believe we are well positioned to build on our strong momentum and capitalise on global macro trends.
Mark S. Hoplamazian, President & CEO of Hyatt
With substantial free cash flow generated from asset-light earnings, together with cash generated from continued asset dispositions, we believe we will continue to have significant flexibility to invest in growth and return capital to shareholders, while maintaining our investment grade profile. We are also pleased to reinstate our quarterly dividend and increase our share repurchase authorisation.
Joan Bottarini, Chief Financial Officer of Hyatt
United-States
