Hyatt Hotels Corporation is scheduled to report its third-quarter 2023 results on Nov 2, before the opening bell.
In the previous quarter, the company’s earnings missed the Zacks Consensus Estimate by 1.2%, while revenues beat the same by 3.3%.
Hyatt’s earnings topped the consensus mark in two of the trailing four quarters and missed on the other two occasions, with an average surprise of 197.3%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the third-quarter bottom line is pegged at 60 cents per share, indicating a fall of 6.3% from earnings of 64 cents per share reported in the year-ago quarter.
Hyatt Hotels Corporation Price and EPS Surprise
For revenues, the consensus mark is pegged at $1,623 million, suggesting growth of 5.3% 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 Q3 2023 top-line performance is likely to have benefited from robust leisure and business travel demand, the easing of travel restrictions (primarily in Greater China), a favorable pricing scenario, and heightened airline capacity. These factors are expected to drive occupancy rates and the average daily rate (“ADR”), resulting in higher revenue per available room (“RevPAR”) growth. New hotel openings, loyalty programs, accretive acquisitions, and business operating strategies are also factors that could have aided the company.
Reportable segment-wise, the growth of owned and leased hotels segment is likely to reflect a solid improvement in business transient and group travel demand. RevPAR for comparable owned and leased hotels is predicted to increase by 26.9% to $224.88 year over year. Occupancy rates and ADR are expected to increase by 1,000 basis points (bps) to 79.3% and 10.9% to $283.59, respectively, compared with the prior-year quarter.
For the third quarter, adjusted revenues of Americas Management and Franchising, ASPAC Management and Franchising, and Apple Leisure Group segments are predicted to increase by 3.7% to $160.7 million, 26.4% to $32.9 million, and 4.6% to $352.4 million, respectively, year over year. Management, Franchise, and Other fee revenues are expected to increase by 4.5% to $213.3 million. EAME/SW Asia Management and Franchising is forecasted to decline by 13% to $26.1 million.
For the third quarter, comparable systemwide hotels’ RevPAR is anticipated to increase 5% to $140.04 year over year. This reflects expectations for ADR and occupancy rates to increase by 0.5% to $197.51 and 300 bps to 70.9%, respectively.
The total number of managed and franchised properties is expected to increase by 11.2% to 1,347 in the quarter compared to the previous year.
Given the market recovery phase, the company expects future booking trends to remain strong, enabling solid top-line growth.
However, ongoing inflationary pressures and economic challenges have been major concerns amid a solid global market recovery. For the third quarter, adjusted EBITDA and operating margins are predicted to decrease by 100 bps to 15.4% and 50 bps to 9.6%, respectively, year over year.
Reportable segment-wise, adjusted EBITDA is expected to increase year over year for owned and leased hotels and ASPAC segments by 16.1% to $76.6 million and 3.2% to $15.5 million, respectively. However, Americas, EAME/SW Asia, and ALG segments’ adjusted EBITDA is forecasted to fall by 1.2% to $112.6 million, 20% to $16.8 million, and 22.3% to $60.6 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 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 +6.33%.
Zacks Rank: The company carries a Zacks Rank #3.
Other Stocks Poised to Beat Estimates
Here are some other stocks from the Consumer Discretionary space that investors may consider, as our model shows that these have the right combination of elements to deliver an earnings beat this time around:
- MGM Resorts International (MGM) – Earnings ESP of +2.61% and a Zacks Rank #2.
- DraftKings Inc. (DKNG) – Earnings ESP of +17.52% and a Zacks Rank #3.
- Cinemark Holdings Inc (CNK) – Earnings ESP of +12.44% and a Zacks Rank #3.
MGM’s earnings surpassed the consensus mark in three of the four quarters and missed once, with an average surprise of 105.7%.
DKNG’s earnings outshined the consensus mark thrice in the trailing four quarters and missed once, with an average surprise of 12%.
The Zacks Consensus Estimate for Cinemark Holdings’ third-quarter earnings is pegged at 42 cents, suggesting 310% growth from the year-ago quarter.
Stay updated with upcoming earnings announcements using the Zacks Earnings Calendar.
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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.