While it’s unclear how long the ongoing downturn will linger, Hyatt Hotels Corporation President and CEO Mark Hoplamazian said that’s not as important as how his company adjusts to the changing environment.
CHICAGO—Hyatt Hotels Corporation President and CEO Mark Hoplamazian is hopeful the worst of the ongoing crisis is in the past for his company, and that ultimately this period can be used to evolve into a stronger company.
Speaking during the company’s second quarter earnings call, Hoplamazian said it’s still unclear how long a recovery will take, but that’s not what will ultimately determine the trajectory of the rebound.
“The timeframe over which demand recovers—especially in the U.S.—is less important than the manner in which we’ve prepared to continuously adapt to whatever conditions we face,” he said.
He said his company is using this opportunity to “proactively reimagine both guests’ experience and the way in which we operate hotels efficiently and effectively.”
The timeline to a return to normal, especially when it comes to corporate travel, only grows hazier, Hoplamazian noted.
“The discussions with most of our key corporate customers has to do with how they’re evolving their own return-to-office experience and also how they’re meeting the demands they’ve got with respect to their businesses,” he said. “The approaches are quite varied, but one thing that is true in many cases is they’re still in discovery mode to understand how many people are going to be coming back into offices in different places.”
He said if anything, that has becoming less clear over time.
“I would say that many people entered the summer expecting that by the middle of the summer they would be in a cadence of people returning to offices,” he said. “But many people have deferred those decisions until after Labor Day.”
The return of demand in China is reassuring for the company, though, Hoplamazian said. And there have even been signs of some group demand in that country.
“We hosted product launches for Volvo and Gucci, and hopefully we’re starting to see the return of group,” he said.
He said Hyatt has seen a strong recovery in leisure transient demand in China, driven by what he described as “ingenuity and innovation amongst our teams in China.” That included the launch of a new platform on WeChat.
The company has been focused on reducing its costs, said CFO Joan Bottarini, which included eliminating 1,300 positions across the company.
“This was an incredibly painful decision, but one we believe was appropriate to adjust our cost structure given the significant reduction in revenues combined with expectations of an extended recovery period,” she said.
Bottarini said Hyatt’s reduced spending and availability of capital will keep it sustained even through a prolonged downturn.
“We believe our existing liquidity, combined with lower actual cash usage demonstrated during the second quarter, support our ability to (sustain operations) for an additional 36 months,” she said, noting the company expects demand to increase and cash burn to decrease soon.
Hyatt ended the quarter with cash and cash equivalents of $1.4 billion.
For the second quarter, Hyatt posted a $236-million net loss, with a 376% year-over-year drop in net income, according to their earnings release. Adjusted earnings before interest, taxes, depreciation and amortization fell 154.6% to -$117 million.
Comparable system-wide revenue per available room was down 89.4% for the company.
But while revenue and demand numbers were weak, pipeline and rooms growth remained a bright spot. Net rooms growth was up 5.8% and the pipeline added 101,000 rooms, a 9.8% increase compared to the same period in 2019.
As of press time, Hyatt’s stock was trading at $49.25 a share, a 45.1% decrease year to date. The New York Stock Exchange Composite was down 9.3% for the same period.
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