Hyatt Hotels Corporation (NYSE:H) Q2 2023 Earnings Call Transcript

First we’ve seen a 19% increase sorry a 16% increase in the Dominican Republic that’s visitation to the Dominican Republic and an 11% increase to Jamaica. But we’ve also seen a 600-basis point increase in US outbound travel to Europe. So our hotels in Europe now have a 27% guest composition from the US, up from 21% last year. So we’re seeing Americans broaden where they’re going. Cancun was the place to go for 2021 and ’22. It was considered to be convenient of tremendous variety great value for money and wonderful in what you can do the experiences you can have. I think people are now evolving and they’re evolving to some other markets. The good news is with respect to our inclusive hotels we cover Jamaica Dominican Republic the West Coast of Mexico.

And Europe has been on fire across the board. Europe has been leading both business transient and leisure for the last couple of quarters, so we continue to have a very positive outlook with respect to that. But back to your specific question about September we have reasonable visibility to it. There are last minute bookings and I think we had a higher proportion of that in 2022 than we expected. So, we were pleasantly surprised by just how strong the within four-week bookings turned out to be for the second half of September just absolutely stunning occupancies and rate realizations there. But right now we have pretty good visibility on the third quarter.

Duane Pfennigwerth: Thanks. That’s helpful. And then just a quick reminder for my follow-up. What is a point-of-sale US for ALG?

Mark Hoplamazian: It’s a majority of the total occupancy. I don’t have a specific number for you.

Duane Pfennigwerth: Okay. Thank you.

Mark Hoplamazian: The remainder would be Canadian and European. Canadian this year has actually increased significantly. One of the biggest I’m sorry — about 70% is US sourced. Canada has increased in the second quarter. That’s been one of the biggest alternative markets that filled in some decline in US sourced travelers into Cancun especially and Europe is the remainder. But honestly right now we’re seeing a higher incidence of European staying in Europe for their holidays still increased year-over-year significantly increased year-over-year employments into Cancun airport from Europe. But in our hotels at least we’re seeing significant incidence of European staying in market.

Duane Pfennigwerth: Thank you.

Operator: Our next question comes from Chad Beynon from Macquarie. Please go ahead, your line is open.

Chad Beynon: Morning. Thanks for taking my question. I wanted to ask about China or I guess Asia just in general. I know pre-pandemic food and beverage was a huge component of that market and the fees that you would derive from that portfolio. Mark you talked about China kind of being back to pre-pandemic levels without the international inbound. Wondering if you could talk about that food and beverage component if that has come back. And then secondly on the international the inbound into China side what do you think the big catalyst or when do you think we’ll start to see that business come in? Thanks.

Mark Hoplamazian: Yes. So, it’s interesting. We’ve seen an evolution of food and beverage demand over the last year and a half. Food and beverage actually led our revenue composition in 2021 and 2022 because staycations were really the only thing that many people could do during lockdowns. And then during the worst parts of 2022 people didn’t do that anymore because they weren’t even allowed to leave their apartments in major cities that is. In this year, we’ve seen improvements across the board across the entire week. So, business transient is actually about flat to 2019 levels. Group is fully recovered and then some and leisure transient is up. Having said that the international inbound still remains depressed or lower than 2019.

It’s about 40% lower than 2019. I think it was actually like 41% or something like that in the second quarter. But that’s an improvement from the first quarter. And those inbound international clients are a key driver of outlet sales that is restaurant and bar and club sales entertainment venues. And so overall F&B revenues in total are slightly down relative to 2019 even as rooms are basically fully recovered. And that’s really — it’s a customer mix issue that’s driving that at this point.