Hyatt Hotels' CEO Discusses Q4 2011 Results - Earnings Call Transcript
Hyatt Hotels Corporation (
)
Q4 2011 Earnings Conference Call
February 16, 2012 12:00 ET
Executives
Atish Shah – Senior Vice President, Investor Relations
Mark Hoplamazian – President and Chief Executive Officer
Harmit Singh – Chief Financial Officer
Analysts
Josh Attie – Citi
Steven Kent – Goldman Sachs
Mark Strawn – Morgan Stanley
David Loeb – Baird
Shaun Kelley – Bank of America/Merrill Lynch
Joe Greff – JPMorgan
Smedes Rose – Keefe, Bruyette & Woods
Carlo Santarelli – Deutsche Bank
Jeffrey Donnelly – Wells Fargo
Ian Weissman – ISI
Presentation
Operator
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Good day, ladies and gentlemen and welcome to the Fourth Quarter 2011 Hyatt Hotels Corporation Earnings Conference Call. My name is (Janeta) and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the conference over to your host for today, Mr. Atish Shah, Senior Vice President of Investor Relations. Please proceed.
Atish Shah
–
Senior Vice
President,
Investor Relations
Thank you, Janeta. Good day everyone and thank you for joining us for Hyatt’s fourth quarter 2011 earnings call. Here with me in Chicago today are Mark Hoplamazian, Hyatt’s President and Chief Executive Officer; and Harmit Singh, Hyatt’s Chief Financial Officer. Mark and Harmit are each going to make some brief remarks about our results for the fourth quarter followed by a question-and-answer session. At the end of the call, I will update you on the change to our call format that we are making, starting next quarter.
So before we get started, let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our Annual Report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in, or implied by our comments.
Forward-looking statements in the earnings release that we issued earlier today along with the comments on this call are made only as of today, February 16, 2012, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a reconciliation of non-GAAP financial measures referred to in our remarks on our website at hyatt.com, under the press release section of our Investor Relations link and in this morning's earnings release.
An archive of this call will be available on our website for 90 days, and a telephone replay of this call will be available for one week for the information included in this morning's release.
And with that, I will turn it over to Mark to get started.
Mark Hoplamazian
–
President and Chief Executive Officer
Thank you, Atish. Good morning and welcome Hyatt’s fourth quarter 2011 earnings call. I would like to talk about two items, the progress we made over the last two years since our IPO and our thoughts on the years ahead as we continue on our path to preference, that is to become the most preferred brand in each segment that we serve for our associates, our guests, and owners.
As we look back over the past few years, let’s focus on our two drivers of earnings growth. First, improvement in results from existing hotels that we own, manage and franchise, and second, expansion of the number of hotels under our brands. As to improved results from our existing hotels, the last few years have been a very good. We have grown our adjusted EBITDA by over 30% with the majority of growth coming from improved performance of our existing hotels. Our owned and leased RevPAR is up nearly 20% and our owned and leased margins are up over 300 basis points.
Management and franchisees are up almost 30% in the two-year period. During this time, we have also increased market share for the majority of our existing hotels. In terms of guest satisfaction, we have seen increases in our customer service scores in all segments and from both guests and meeting planners over the past two years.
Engagement among our associates across the company has increased by a significant margin as well. One other comment on our results from existing hotels, as you know we have renovated several of our large owned full-service hotels over the last two years. These major renovations were completed on time and on budget and we are on track to complete the public space renovation of the Grand Hyatt, San Francisco later this year. The feedback regarding the renovation has been excellent. We expect results from the renovated hotels to improve over time as guests and meeting planners experience the new facilities.
As to our second driver of growth, the expansion of the number of hotels under our brands, we benefited from great support from third-party developers and owners around the world, augmenting our own acquisitions. Over the last two years, we have grown our overall hotel portfolio by 14% on a net basis. We have added presence in new markets and expanded significantly in key markets such as Shanghai, New York and New Orleans. As a result of this increased presence, we are being included in more corporate travel programs with our number of corporate negotiated accounts up approximately 35% over the past two years.
Additionally, we have a great number of loyal guests with a number of Gold passport members up 25% over the two-year period and importantly, the number of Gold passport members who stayed with us five or more times has increased by approximately 40%. The application of capital to certain projects and markets is an important piece of our strategy to achieve our goal of good thoughtful growth. Over the last two years, we’ve invested more than $1 billion on a variety of renovations and acquisitions net of full service and flex service assets that we sold. Most of that investment has been in the U.S. As you know we acquired 20 hotels from large works last year. I’m happy to report that the acquired hotels are performing well and benefiting from having access to Hyatt's loyal guests and our revenue systems.
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