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Hyatt Hotels Corporation H is scheduled to report its second-quarter 2023 results on Aug 3, before the opening bell.
In the previous quarter, the company’s earnings missed the Zacks Consensus Estimate by 12.8% while revenues beat the same by 5.4%.
Hyatt’s earnings topped the consensus mark in three of the trailing four quarters and missed on one occasion, the average surprise being 1,372.6%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line is pegged at 83 cents per share, indicating growth of 80.4% from earnings of 46 cents per share reported in the year-ago quarter.
Hyatt Hotels Corporation Price and EPS Surprise
Hyatt Hotels Corporation price-eps-surprise | Hyatt Hotels Corporation Quote
For revenues, the consensus mark is pegged at $1,650 million, suggesting growth of 11.3% from the prior-year quarter’s reported figure.
Let’s look into the factors that are likely to have influenced the quarter.
Factors at Play
Hyatt’s second-quarter 2023 performance is likely to have benefited from robust leisure and business travel demand, easing of travel restrictions (primarily in Greater China), favorable pricing scenario and heightened airline capacity. These tailwinds are likely to have driven occupancy rates and average daily rate (ADR), resulting in higher revenue per available room (RevPAR) growth. Furthermore, new hotel openings, loyalty program, accretive acquisitions and business operating strategies are expected to have aided the company.
Reportable segment-wise, owned and leased hotels segment’s growth is likely to reflect solid improvement in business transient and group travel demand. For the second quarter, our model predicts RevPAR for comparable owned and leased hotels to increase 16.4% to $216.8 year over year. Also, we expect occupancy rates and ADR to increase by 1,000 basis points (bps) to 80.4% and 1.9% to $269.7, respectively, compared to the prior-year quarter.
Furthermore, for the quarter, we predict adjusted revenues of Americas Management and Franchising, ASPAC Management and Franchising, EAME/SW Asia Management and Franchising and Apple Leisure Group segments to increase 2.2% to $160.5 million, 50.6% to $27.1 million, 22.4% to $25.7 million and 5.8% to $348 million, respectively, year over year. Also, we anticipate the Management, Franchise and Other fee revenues to increase 4.5% to $213.3 million.
For the to-be-reported quarter, we expect comparable systemwide hotels’ RevPAR to increase 7.1% to $139.4 year over year. This reflects our expectations for ADR and occupancy rates to increase 2.4% to $203.5 and 300 bps to 68.5%, year over year. Also, we anticipate total managed and franchised properties to increase 9.8% to 1,418 in the quarter, compared to the prior year.
Given the market recovery phase, the company expects future booking trends to remain strong, enabling solid top-line growth.
Although ongoing inflationary pressures and economic challenges have been major concerns, Hyatt is still likely to witness margin and earnings growth on a year-over-year basis. The strongglobal marketrecovery and RevPAR growth are likely to have aided the company in the risky economic environment.
For the second quarter, our model predicts adjusted EBITDA and operating margins to increase 340 bps to 20.36% and 430 bps to 14.45, respectively, year over year.
Reportable segment-wise, we expect adjusted EBITDA to increase year over year for owned and leased hotels, Americas, ASPAC, EAME/SW Asia and ALG segments to increase 7.4% to $106.3 million, 6.2% to $147.6 million, 233% to $20 million, 63.5% to $21.3 million and 51.1% to $81.6 million, respectively.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Hyatt this time around. The company does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.
Earnings ESP: Hyatt has an Earnings ESP of -2.67%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank of 3.
Stocks Poised to Beat on Earnings
Here are a few stocks from the broader Zacks Consumer Discretionary sector, which according to our model, have the right combination of elements to beat on earnings this season:
MGM Resorts International MGM has an Earnings ESP of +23.22% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of MGM Resorts have increased 53.6% in the past year. MGM’s earnings beat estimates in two of the trailing four quarters and missed the mark twice, the average surprise being 81%.
DraftKings Inc. DKNG has an Earnings ESP of +6.60% and a Zacks Rank of 2.
Shares of DraftKings have increased 106.8% in the past year. DKNG’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 15.3%.
Wynn Resorts, Limited WYNN has an Earnings ESP of +55.56% and a Zacks Rank of 3.
Shares of Wynn Resorts have increased 69.2% in the past year. WYNN’s earnings beat estimates in two of the trailing four quarters, missed the mark once and remained flat on the remaining one occasion, the average surprise being 67.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Hyatt Hotels Corporation (H) : Free Stock Analysis Report
Wynn Resorts, Limited (WYNN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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