Hyatt Hotels Corp. experienced a decline in demand for all-inclusive resorts in the second quarter, leading to a “return to pre-pandemic seasonality” in Mexico and the Caribbean. The CFO, Joan Bottarini, noted that the Inclusive Collection portfolio initially had a strong first quarter with double-digit net package RevPAR growth but saw a more modest 3% increase in the second quarter. This slowdown in growth in the Americas was reflected in a 2% net package RevPAR growth for the Inclusive Collection in Q2.
The challenges faced by Hyatt in the current quarter include temporary disruptions due to early hurricanes and airline system disruptions. However, looking ahead to the fourth quarter, the company anticipates an uptick in pacing as they head into the festive season with growth in the mid-single digits. Additionally, the resorts in Europe have shown continued strength, building on strong results from the previous year.
In addition to the slowdown in all-inclusive growth, Hyatt also reported a softening in domestic leisure travel in the U.S. This decline in leisure revenue by approximately 2% was attributed to “temporary headwinds” such as significant renovations at key U.S. resorts and the lingering effects of wildfires in Maui from the previous year. Renovation projects at properties like the Confidante Miami Beach, Hyatt Regency Scottsdale, and Hyatt Regency Indian Wells are expected to bring updates and relaunches under the Grand Hyatt brand.
Despite the challenges faced in the all-inclusive and leisure travel segments, Hyatt reported strong performance in the group and business segments. The company saw an 8% increase in group revenue and a 14% increase in business revenue in the U.S. Furthermore, Hyatt posted a systemwide RevPAR gain of 4.7% in the second quarter with an average daily rate (ADR) increase of 1.1% and occupancy up by 2.4 percentage points to 72.9%.
In terms of financials, Hyatt reported second-quarter net income of $359 million, a significant increase from $68 million in the second quarter of the previous year. Total revenue for the quarter slightly decreased to $1.703 billion from $1.705 billion a year earlier, reflecting the overall challenges faced by the company in the second quarter.
Overall, the second quarter presented several challenges for Hyatt Hotels Corp., particularly in the all-inclusive and leisure travel segments. Despite the slowdown in growth in these areas, the company showed resilience and strong performance in other segments, indicating a capacity for recovery and adaptation in the face of changing market conditions.