Hyatt Hotels Corporation (H) Earnings

Management highlights

- Acknowledged recent events in the Middle East and isolated security concerns in Mexico, with teams handling operations well. - Operating results: system-wide REVPAR growth exceeded expectations, driven by luxury brands globally. Leisure and business travel demand strong. World of Hyatt loyalty program had 66 million members, up 18% year-over-year, with members accounting for nearly half of occupied rooms. - Development activity: record development pipeline of ~151,000 rooms, up over 9% year-over-year. Strong interest in new brands, with signings in US and international markets. Net rooms growth of 5% in Q1. - Notable hotel openings in lifestyle and essentials brands. Progress on selling Hyatt Grand Central New York, terminated sale of Undoved London Liverpool Street and others, but broader asset sale plans unchanged. - Elevating Hyatt focuses on brands, talent, and technology to drive value, with strong brand equity, developing leaders, and leveraging technology for insights.

Guidance

- Raised full-year system-wide REVPAR growth outlook to 2%-4%, with US REVPAR expected to grow 2%-3% and international markets to have moderately higher growth but lower than previous quarter due to Middle East conflict. - Full-year net rooms growth expected 6%-7%. - Gross fees outlook raised, expected to grow 9%-11% to $1.305-$1.335 billion. - Maintained adjusted EBITDA outlook range, expected to grow 13%-18% to $1.155-$1.205 billion. - Maintained adjusted free cash flow outlook 580-630 million, increase of 20-30%. - Expected to return $325 million-$375 million of capital to shareholders through share repurchases and dividends for the full year. - Second quarter global REVPAR growth expected around 3%, gross fees to grow in mid-single digits, adjusted EBITDA expected up in mid-single digits compared to Q2 2025 after adjustments.

Segment performance

System-wide REVPAR grew 5.4% in the first quarter. In the United States, REVPAR increased 3.3%. Outside the United States, RevPAR growth was over 8%. Greater China grew RevPAR over 12%, Asia Pacific (excluding Greater China) RevPAR increased over 11%, Europe had RevPAR growth of 7.5%, and RevPAR in the Middle East and Africa declined by approximately 4% due to the conflict in the Middle East. Core fee business performed well: growth fees increased approximately 9% to $333 million, and incentive fees grew approximately 14%. Owned and leased segment adjusted EBITDA declined by approximately $2 million, adjusted for asset sales. Distribution segment adjusted EBITDA declined versus the prior year due to temporary factors like closure of hotels in Jamaica and lower demand in Mexico.

Risks & headwinds

- Evolving situation in the Middle East impacting Middle East and Africa business. - Isolated security concerns in Mexico affecting demand. - Closure of hotels in Jamaica due to Hurricane Melissa impacting distribution segment. - Higher gasoline prices, airline ticket prices, and reduced flight capacity potentially impacting demand, especially among lower income households.

Analyst Q&A

• Q: Lizzie Dove with Goldman Sachs asked about the positive shift in U.S. demand dynamic and what's embedded in the 2%-3% REVPAR growth for the U.S. in the year.

  A: Mark mentioned leisure transient in US was up 4% in Q1, Group REVPAR up 1.2% with comparison to inauguration last year, Select Service REVPAR strong due to business transient improving. Expect second quarter US growth between 2%-3% helped by FIFA group business in June carrying over, group business up in mid-single digits for remainder of year in US, confident about US outlook.

• Q: Stephen Grambling with Morgan Stanley asked about the drivers of the distribution segment longer term and synergies.

  A: Distribution segment hit by isolated issues like Jamaica closure and Mexico security concerns, viewed as isolated. See more opportunities than risks, deriving from revamping go-to-market in core business and ALGV having strategic value with channel shift, Mexico represents about 10% of total gross fees, Dominican Republic 6%, Jamaica 1%, Hyatt Inclusive Collection had positive RevPAR growth in Mexico and Dominican Republic.

• Q: Michael Bellisario with Bayard asked about thinking about macro uncertainties like higher gasoline, airline ticket prices, reduced flight capacity.

  A: Sensitive to airfares, if oil prices persist higher, biggest hit on lower income households, but Hyatt serves higher income households, not seeing significant demand shifts yet but paying close attention.

• Q: Richard Clark with Bernstein asked about Jamaica hotels reopening and Mexico demand normalization.

  A: Jamaica removed from this year's impact, Mexico seeing moderating of impact, week on week pace getting better, outlook positive for Caribbean and net package RevPAR in Americas due to improvement in Mexico and redirection of travel.

• Q: Sean Kelly with Bank of America asked about Middle East and Africa trending and global offsets.

  A: Middle East demand impacted more in Q2, expected to improve in second half, China has strong results with REVPAR growth 12% in Q1, Europe resilient with positive outlook despite economic fragility concerns.

• Q: Smeets Rose with Citi asked about terminating asset sales and transaction environment.

  A: For Andaz in London, hotel sits on rail lines with approvals not issued, but optimistic for different deal shape. Other small deals due to market specific reasons, market for property sales more constructive this year than last year, still working on other asset sale opportunities.

• Q: Duane Fittigworth with Evercore asked about acceleration in back half of year.

  A: Core business strong, net rooms growth expectations, distribution segment to recover with easier comps in fourth quarter, renegotiated playa contracts removing first quarter headwinds, G&A expense expected lower in last three quarters of year.

• Q: Dan Pulitzer with JP Morgan asked about World Cup impact.

  A: Pace in cities hosting World Cup, especially New York for finals, strong group business pacing well ahead in those markets, visibility on group side good with mid-teens group pace increase.

• Q: David Kapp from Jefferies asked about technology and AI.

  A: Made significant progress in AI, combined advancements in tools and platforms, focus on revenue-facing activity with productivity gains, using AI to elevate guest and colleague interactions by reducing administrative work.

• Q: Trey Bowers with Wells Fargo asked about NUG and brand uptake.

  A: Pipeline increase, especially in essentials brands, 25% year-over-year increase in essentials pipeline, sequential improvement in hotels under construction, about two thirds of room openings this year from pipeline, strong activity in US essentials brands, select brand taken off with over 30% of conversions planned for year being select hotels.

• Q: Meredith Jensen with HSBC asked about loyalty program.

  A: 60 or 65% of room nights paid for, members spend twice as much as non-members, demographic profile growing stronger, working with partners and sponsorships, focus on experiences and emotional connectivity with members.