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UPDATE 2-Hyatt profit beats as US demand drives room rates
July 31, 2013 / 1:10 PM / 4 years ago

UPDATE 2-Hyatt profit beats as US demand drives room rates

* Second-quarter adj earnings/share $0.43 vs est $0.30

* Revenue up 7.7 pct

* RevPAR up 6.1 pct at U.S. full-service hotels

* Shares rise as much as 6.8 pct (Adds analyst, CEO comment, updates share price)

By Mridhula Raghavan

July 31 (Reuters) - Hyatt Hotels Corp’s quarterly profit topped Wall Street estimates as increased travel in the United States allowed the company to charge more for rooms.

Shares of Hyatt, which owns the Park Hyatt, Grand Hyatt and Andaz chains, rose as much as 6.8 percent on Wednesday.

Shares of rivals Starwood Hotels & Resorts Worldwide Inc and Marriott International Inc also rose.

“Hotel occupancies generally have come back pretty close to peak levels at this point in time (and) most hotels are running at their prior peak levels,” FBR Capital Markets analyst Nikhil Bhalla said.

Hyatt, controlled by the billionaire Pritzker family of Chicago, reported that its second-quarter profit nearly tripled to $112 million, or 70 cents per share.

Revenue per available room (RevPAR) rose 6.1 percent at full-service hotels in the United States, which accounts for about three quarters of the company’s revenue.

RevPAR is a key measure of hotel health, calculated by multiplying a hotel’s average daily room rate by its occupancy rate.

Hyatt’s results follow those of Starwood, which raised its 2013 earnings forecast last week after reporting a strong quarterly profit. Marriott is scheduled to report later on Wednesday.

In a note titled ‘Finally a nice quarter,’ Suntrust Robinson Humphrey analyst Patrick Scholes wrote, “... all the stars seemed to have aligned for Hyatt in Q2 and we believe investors will be relieved (for now).”

Hyatt had been lagging rivals due to its underperforming group bookings business, where guests who have booked in bulk make use of such add-on services as catering and banquets.

While Hyatt said on Wednesday it expects group demand in the United States to remain modest, a tight supply of rooms is allowing it to charge more.

Group room revenue at Hyatt’s full-service hotels rose 5.2 percent in the quarter ended June.

Revenue rose 7.7 percent to $1.2 billion, above analysts’ average expectation of $1.07 billion, according to Thomson Reuters I/B/E/S.

The company earned 43 cents per share, excluding items, 13 cents ahead of the average analysts forecast.

Hyatt shares have risen about 11 percent from the start of the year to Tuesday’s close. They were up 6.3 percent at $45.40 on the New York Stock Exchange on Wednesday, after touching a two-year-high of $45.60 earlier in the day. (Reporting by Mridhula Raghavan in Bangalore; Editing by Joyjeet Das)

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