Hyatt's Q3 Earnings Surpass Estimates, Revenues Lag, Stock Down

Core Viewpoint - Hyatt Hotels Corporation reported third-quarter 2024 results with earnings exceeding expectations but revenues falling short, leading to a 2% decline in share price during pre-market trading [1] Financial Performance - Adjusted earnings per share (EPS) were 94 cents, surpassing the Zacks Consensus Estimate of 90 cents, and up from 74 cents in the same quarter last year [2] - Revenues totaled $1,629 million, missing the consensus mark of $1,638 million, but reflecting a year-over-year increase of 0.4% [2] - Owned and Leased revenues decreased by 12.8% to $287 million, while Other revenues plummeted 83.5% to $13 million; Distribution revenues fell 3.5% to $221 million [3] - Net fees rose 4.3% year over year to $241 million, and revenues for reimbursed costs increased to $867 million from $754 million in the prior-year quarter [3] Operating Highlights - Adjusted EBITDA was $275 million, an 8.9% increase year over year, though below the expected $292.6 million [5] - Adjusted EBITDA for Management and Franchising and Distribution segments increased by 8.9% and 26.1% to $210 million and $38 million, respectively; however, Owned and Leased segment's adjusted EBITDA fell 12.5% to $63 million [5] Balance Sheet - As of September 30, 2024, cash and cash equivalents stood at $1,134 million, down from $1,957 million in the previous quarter; total liquidity was $2.6 billion [6] - Total debt was reported at $3.14 billion as of September 30, 2024 [6] Business Updates - In Q3, 16 new hotels (2,589 rooms) were added to Hyatt's system, with a pipeline of approximately 690 hotels (about 135,000 rooms) as of September 30, 2024 [7] 2024 Outlook - For 2024, adjusted general and administrative expenses are expected to be between $425 million and $435 million, with capital expenditures projected at $170 million [8] - Net rooms growth is anticipated to be between 7.75% and 8.25% year over year, with a range of 4% to 4.5% excluding the Bahia Principe transaction [8] - System-wide RevPAR is expected to rise by 3-4% from 2023 levels, with adjusted EBITDA now forecasted between $1.1 billion and $1.12 billion, down from a prior range of $1.13 billion to $1.17 billion [9] - Free cash flow is anticipated to be in the range of $380 million to $410 million [9]