Hyatt revenue misses on weak group bookings
(Reuters) - Hyatt Hotels Corp's (H.N) quarterly revenue missed estimates as its higher exposure to a weak group bookings business in the United States more than offset gains from a business-led recovery that is boosting occupancy rates at rivals.
Shares of Hyatt fell as much as 7 percent to $39.52 on Wednesday, more than wiping out gains the previous day after Starwood Hotels and Resorts Inc's (HOT.N) strong results.
"This is overall a bit of a disappointment in terms of its core business," ISI Group analyst Ian Weissman said.
Starwood, the operator of Sheraton and Westin hotels, reported a quarterly profit that beat analysts' expectations as more people checked into its hotels at higher room rates, particularly in North America.
Hyatt's comparable systemwide revenue per available room (revPAR), a key metric for the hotel industry, increased 2.4 percent. This compares to a 5 percent increase for Starwood.
Hyatt attributed the fall to weakness in group bookings in the first quarter due to ongoing renovations at its hotels and the Easter holiday. Group rooms revenue at comparable U.S. full service hotels fell about 6 percent in the quarter.
Hyatt, controlled by the billionaire Pritzker family, draws about three quarters of its revenue from the United States, where hotel occupancy rates have risen over the past year.
Group business usually includes a block of room accommodations as well as services such as catering and banquet services. Hyatt's group guests travel for group events that reserve a minimum of 10 rooms for meetings or social functions.
Hyatt, which owns and operates hotels under brands such as Park Hyatt, Grand Hyatt and Hyatt Regency, has more exposure to group bookings than any of its peers.
Its group business accounts for about 45 percent of total room revenues at managed U.S. full-service hotels.
Net income fell to $8 million, or 5 cents per share, for the first quarter, from $10 million, or 6 cents per share, a year earlier. Total revenue rose about 2 percent to $975 million.
Excluding items, profit was 9 cents per share for the quarter, topping analysts' estimates of 8 cents, according to Thomson Reuters I/B/E/S.
"Unfortunately, the EPS beat was driven by a lower tax rate - not exactly the high quality outperformance we'd like to see," Raymond James analyst William Crow said in a note.
Chicago-based Hyatt increased its share buyback plan by up to an additional $200 million.
(Reporting by Ritika Rai in Bangalore; Editing by Saumyadeb Chakrabarty)
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