Despite downplaying its exposure in China, Hyatt Hotels Corp. acknowledged the company is bracing for negative impact from the Covid-19 coronavirus outbreak in Asia Pacific and beyond. 

During the company’s full-year 2019 earnings call on Thursday, Hyatt CFO Joan Bottarini said Hyatt has closed 26 hotels in Greater China (mainland China, Macau, Hong Kong and Taiwan) with “many others that remain open running at very low occupancies.”

“There’s no question there will be an impact to our results, but it’s simply too early to reasonably quantify what the full-year impact to our business in 2020 might be,” said Bottarini. “We expect [every] 1% of Greater China RevPAR decline to equal $1 to $2 million in EBITDA on an annual basis, and that includes impact on outbound travel. For example, if full-year China RevPAR is down 10%, the full-year impact would be about $10-$20 million.”

Bottarini estimated that the Asia Pacific region accounts for approximately 22% of Hyatt’s annual consolidated base, incentive and franchise fees, with Greater China accounting for a total of 11%. She emphasized that outbound Chinese travel to destinations beyond the Asia Pacific region makes up “a very small percentage” of Hyatt’s total room revenue.

“The biggest impact is in Greater China, including Hong Kong, Macao and Taiwan,” said Hyatt CEO Mark Hoplamazian. “And then as you go further out to the countries that are then impacted, you include Thailand, South Korea, Vietnam, Singapore, Japan and Indonesia, and also ultimately Australia. The impact is greatest in the epicenter of the mainland, but then it radiates.”

Hoplamazian added that Hyatt has seen some coronavirus-related cancellations occurring outside of Asia Pacific, including in Dubai, India and the U.S. He attributed the activity to the cancellation of small meetings, primarily within the technology and consulting sectors.

“That group business, we’re paying special attention to that, but we don’t think it’s going to be significant in these markets outside of Asia Pacific,” said Hoplamazian.

Hyatt reported that RevPAR for Southeast Asia, Greater China, Australia, South Korea, Japan and Micronesia declined 3.5% for full-service hotels in the fourth quarter, due primarily to unrest in Hong Kong, while RevPAR increase 4.2% for select-service hotel in the region. 

In the U.S., RevPAR decreased 1.3%, with full-service and select-service RevPAR falling 1.1% and 1.8%, respectively. Hyatt partly blamed a supply and demand imbalance, with select-service performance expected to continue to lag behind full-service hotels throughout the year. 

Systemwide, Hyatt posted a 0.5% decrease RevPAR for the fourth quarter and a 0.7% increase for 2019. Net income for the quarter surged 621.5% to $321 million, while net income for 2019 was down 0.4% to $766 million.

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