Hyatt reports decline in group business

Hyatt reports decline in group business
Photo Credit: Kaesler Media/

Hyatt was weighed down by sluggish U.S. group business in its second quarter, with total U.S. revenue per available room (RevPAR) declining 0.3%.

"Overall group production for the quarter was weaker than we expected, primarily coming from association and SMERF (social, military, education, religious and fraternal) business having lower participation rates," Hyatt CEO Mark Hoplamazian told investors Thursday morning. 

Full-service hotels' RevPAR in the U.S. increased just 0.7% for the quarter, while select-service hotels' RevPAR decreased 2.3%. Group room revenue at U.S. full-service hotels fell 2.9%.

Chicago, Hyatt's largest group market in the U.S., was particularly hard hit, with the city's group revenue down 15% in the first half of 2019 and quarterly RevPAR down 3.6% for luxury and upper-upscale hotels.

Also, investors expressed concern over delayed openings of Miraval hotels, which the company said contributed to a reduction of expectations for full-year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Acquired by Hyatt in 2017, the Miraval brand has been somewhat slow to develop. The luxury wellness brand's second resort, the Miraval Austin, opened this past February. A third location, the Miraval Berkshires, is scheduled to open in Lenox, Mass., next year. 

"The construction disruptions that we've had prevented us from having our inventory available to sell, so as a consequence, we've had a lag in being able to ramp up Austin," said Hoplamazian. "With respect to Lenox, we've similarly had delays, mostly with the permitting process and site condition issues. Lenox has been a challenge to complete and will continue to be, until we finish it."

Hoplamazian remains bullish on Miraval, pointing to the sustained success of the brand's original resort in Tucson, Ariz.

"Tucson continues to perform very well," he said. "If you look at the earnings level of Tucson by itself, it will have revenues in excess of $50 million this year. The occupancy at Tucson Miraval is running over 70% year-to-date, ADR is over $530, but maybe even more importantly, Miraval yields a business in which rooms revenue represents only about a third of the total revenue base for each resort, and the remainder is food and beverage, experience, treatments and services on property. We have no real concerns about the brand."

Looking beyond the U.S., Hoplamazian said that China had significant headwinds in the quarter, which he attributed in part to negative impacts from the recent demonstrations in Hong Kong and a challenging casino environment in Macau.

Systemwide, Hyatt reported a RevPAR increase of 1.3%. Total revenue for the quarter rose nearly 14% to $1.29 billion. 


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