Hyatt Hotels Corp. experienced a decrease in demand for its all-inclusive resorts in the second quarter, particularly in Mexico and the Caribbean. CEO Mark Hoplamazian attributed this decline to a “return to pre-pandemic seasonality” in the region. CFO Joan Bottarini noted that while Hyatt’s Inclusive Collection portfolio had a strong first quarter with double-digit net package revenue per available room (RevPAR), the growth slowed to a more modest 3% increase in the second quarter.
Bottarini also mentioned temporary disruptions in the third quarter, such as early hurricanes and airline system disruptions. However, she expressed optimism about the fourth quarter, stating that they are seeing an uptick in pacing leading into the festive season in the mid-single digits. In contrast, Hyatt’s resorts in Europe have shown continued strength, surpassing strong results from the previous year.
Softening Domestic Leisure Travel
In addition to the slowdown in all-inclusive growth, Hyatt reported a decline in domestic leisure travel in the U.S. Leisure revenue decreased by approximately 2% in the quarter, with temporary headwinds affecting this segment. Significant renovations at key U.S. resorts and lingering effects from last year’s wildfires in Maui contributed to this decline.
Performance in Group and Business Segments
Despite the challenges in the leisure travel sector, Hyatt reported strong performance in the group and business segments. Group revenue increased by approximately 8%, while business revenue saw a 14% uptick in the U.S. The company achieved a systemwide RevPAR gain of 4.7%, reaching $149.31, with an increase in average daily rate (ADR) by 1.1% to $204.73. Occupancy also rose by 2.4 percentage points, reaching 72.9%.
Hyatt reported a significant increase in net income for the second quarter, reaching $359 million, up from $68 million in the same period the previous year. Total revenue for the quarter was $1.703 billion, a slight decrease from $1.705 billion reported a year earlier. Despite the challenges faced in the leisure travel sector, Hyatt’s overall financial performance remains strong.