Hyatt Hotels Corp. faced a decline in demand for all-inclusive resorts in the second quarter, which CEO Mark Hoplamazian attributed to a “return to pre-pandemic seasonality” in Mexico and the Caribbean. Despite enjoying a strong first quarter with double-digit net package revenue per available room (RevPAR), the Inclusive Collection portfolio saw a more modest 3% increase in the second quarter. The net package RevPAR growth in the Americas for Q2 was only 2%, indicating a slowdown in all-inclusive growth for Hyatt.
The third quarter brought temporary disruptions for Hyatt, including early hurricanes and airline system disruptions. CFO Joan Bottarini mentioned these challenges but expressed optimism for an upswing in the fourth quarter, particularly into the festive season with expected mid-single digit growth. The resorts in Europe have been performing well, surpassing strong results from the previous year. However, the company is facing difficulties in maintaining growth in the current quarter.
Hyatt also reported a softening in domestic leisure travel in the U.S., with leisure revenue decreasing by approximately 2% in the quarter. Hoplamazian identified “temporary headwinds,” such as significant renovations at key U.S. resorts and lingering effects from last year’s wildfires in Maui. Projects like the renovation of Confidante Miami Beach and updates at Hyatt Regency Scottsdale and Hyatt Regency Indian Wells are expected to contribute to growth once completed. This decrease in domestic leisure travel poses a challenge for Hyatt in the U.S. market.
Strong Performance in Group and Business Segments
Despite the challenges faced in the all-inclusive and domestic leisure markets, Hyatt reported strong performance in the group and business segments. Group revenue increased by approximately 8% and business revenue was up 14% in the U.S. The company’s systemwide RevPAR saw a 4.7% gain in the second quarter, reaching $149.31. Average daily rate (ADR) rose by 1.1% to $204.73, while occupancy increased by 2.4 percentage points, reaching 72.9%. These positive results in the group and business segments offset the challenges in other areas for Hyatt.
In terms of financial results, Hyatt reported second-quarter net income of $359 million, a significant increase from $68 million in the same quarter of 2023. Total revenue for the quarter was $1.703 billion, slightly down from $1.705 billion a year earlier. Despite the decrease in total revenue, the strong net income indicates the company’s ability to navigate challenges and capitalize on opportunities in the evolving hospitality market.
Overall, Hyatt Hotels Corp. faces challenges in the all-inclusive resort market and domestic leisure travel, but the company’s performance in the group and business segments demonstrates its resilience and potential for growth in the future. By addressing temporary disruptions and capitalizing on opportunities in emerging markets, Hyatt can position itself for success in the competitive hospitality industry.