Hyatt Hotels Corp. Q3 FY2025 earnings call

• Sale of Playa Hotels properties: Sold a property in Playa del Carmen for ~$22 million, with net proceeds used to repay a portion of the delayed draw term loan. Progress on selling owned properties: 3 hotels under contract and 3 with signed letters of intent, expected to close in early 2026. - Operating results: RevPAR growth of 0.3% in line with expectations. International markets performed well, with Europe seeing positive RevPAR growth and Greater China experiencing RevPAR growth due to increased leisure transient demand. - Growth: Net rooms growth over 12% during the quarter (7% excluding acquisitions), notable openings like Park Hyatt Kuala Lumpur and Park Hyatt Johannesburg. Strong development pipeline of approximately 141,000 rooms, up over 4% from last year. - Loyalty program: World of Hyatt surpassed 61 million members, a 20% year-over-year increase. Expanded agreement with Chase expected to drive adjusted EBITDA growth from ~$50 million in 2025 to ~$105 million in 2027. - Restructuring: Expected to incur approximately $50 million of restructuring charges this year, with the majority recorded in the third quarter.

System-wide RevPAR grew 0.3% for the quarter. Luxury brands had the highest RevPAR growth. Leisure transient RevPAR increased 1.6% year-over-year, with luxury brands up approximately 6%. The all-inclusive portfolio's net package RevPAR grew 7.6% compared to the third quarter of 2024. Business transient RevPAR was flat in the quarter, but saw a 3% growth in the United States, and select service delivered positive quarterly growth for the first time in 2025. Group RevPAR declined 4.9%, but group pace for the fourth quarter is up approximately 3%. Gross fees in the quarter were $283 million, up 6.3% excluding the impact of the Playa Hotel acquisition. Owned and leased segment adjusted EBITDA increased by 7%, while the distribution segment adjusted EBITDA was down due to lower booking volumes and lapping a one-time benefit from the prior year.

• Full year 2025 RevPAR expected in the range of 2%-2.5%. - Net rooms growth outlook range increased to 6.3%-7% (excluding rooms from Playa acquisition). - Gross fees expected to be in the range of $1.195 billion to $1.205 billion, a 9% increase at the midpoint compared to last year. - Adjusted G&A range lowered to $440 million to $445 million. - Adjusted EBITDA for the full year expected in the range of $1.09 billion to $1.11 billion, an 8% increase at the midpoint compared to last year when adjusting for asset sales. - Co-brand card adjusted EBITDA expected to be approximately $90 million in 2026 and ~$105 million in 2027, with continued growth anticipated in future years.

• Government shutdown impact: Potential impact on travel, with reduced air traffic capacity possibly affecting leisure demand. - Air traffic cuts: Reduction in air travel capacity could have an impact on travel, though hotel teams are prepared to pivot using agility and AI tools. - Leisure demand risks: While leisure demand remains strong, there are potential risks associated with maintaining pricing levels and overall market dynamics.

Q: Just wanted to start on net rooms growth, if we could. Good to see you raise the core NUG guidance for the full year and the pipeline increased. As we start to think about next year, realizing it is still early, but with the trends you are seeing in your pipeline and the positive commentary, how are you thinking about net rooms growth going into 2026 and beyond?

A: Thanks, Steve. The headline here is organic growth is extremely strong. We are on track to more than double our core organic growth rate from last year to this year. We have real momentum in signings as we head into the fourth quarter. We're expecting continued acceleration of signings through the fourth quarter. We have about 38 hotels that we have planned to open in the fourth quarter, 7 of those were opened in October. We're very confident about 6% to 7% growth again next year.

Q: I guess I just wanted to ask you a little bit about kind of what you're seeing so far in terms of group pace in the U.S. and kind of internationally for 2026, anything you can share on that.

A: You're going to start? I'll start and Joan can provide additional commentary. So we ended the year -- sorry, end of the quarter, third quarter with pace into '26 up in the high single digits. October was a stunning month in terms of total bookings. Full cycle bookings were up 15% in October, which is quite significant. Having said that, the bookings for 2026 specifically, were actually weaker than we expected them to be. But we have over 60% of the business on the books. And we have really, really attractive date patterns remaining in 2026 to book. So our confidence about group business coming through really strong into 2026 is very high even in spite of the fact that October itself was somewhat weaker in terms of '26 bookings. And Joan, did you have anything that you wanted to add?

A: The only thing I would add is you didn't mention this, Smedes, but we've obviously are encouraged by what we're seeing in Q4, which is what we had expected all year round because of the holiday shift. So we're up 3% in the production that we saw in October is strong for really short-term, high-quality corporate bookings. So we feel really confident about Q4.