Dive Brief:
- In the first quarter of 2025, Hyatt Hotels saw strong performance results in the face of “growing volatility in the economy and financial markets,” CEO Mark Hoplamazian said in a Thursday earnings statement.
- The hotel company saw comparable systemwide hotel RevPAR increase 5.7% year over year, with business transient and group travel driving the growth, the report detailed. Meanwhile, Hyatt reported 10.5% year-over-year net rooms growth in Q1, bolstered by the opening of 11,253 rooms.
- While momentum in Hyatt’s development pipeline remains strong, the company’s increasingly asset-light business model, specifically, will help hedge against economic uncertainty in the near term, Hoplamazian noted. Shifts in booking behavior, though, led Hyatt to downgrade its 2025 RevPAR growth outlook.
Dive Insight:
Speaking to the current macroeconomic climate, Hoplamazian was blunt: “Look, it’s obviously a choppy environment,” he said during a Thursday earnings call. “The GDP figures that just came out are not encouraging.”
U.S. gross domestic product decreased 0.3% year over year in the first quarter of this year — the first contraction since Q1 2022, The Wall Street Journal reported Wednesday.
Economic uncertainty is impacting travel, Hyatt leaders noted. Despite strong corporate travel demand in Q1 — with promising pace development into 2026 — Hyatt has seen signs of slowing customer booking behavior in short-term leisure transient demand, CFO Joan Bottarini said during the call. Additionally, Hyatt has experienced “significant cancellations” in government group bookings, per Hoplamazian.
This softening demand led Hyatt to downgrade its full-year 2025 RevPAR growth outlook to a 1% to 3% growth range, lower than its previously forecasted 2% to 4% range. Hyatt expects RevPAR growth in its international markets to outperform the U.S. this year, Hoplamazian noted.
A silver lining for Hyatt is momentum on the development front. Hyatt ended Q1 with a pipeline of approximately 138,000 rooms, up 7% year over year, the CEO shared on the call.
“New signings replaced the rooms that opened during the quarter, and development interest in our brands remains very strong,” Hoplamazian said. Hyatt is particularly bullish on the upper midscale segment, opening its first Hyatt Studios hotel and launching new brand Hyatt Select in Q1.
Both of these brands will help Hyatt grow its domestic footprint in suburban, interstate and small metropolitan markets, according to Hoplamazian.
Meanwhile, Hyatt’s increasingly asset-light operating model, which is “more durable and predictable through economic cycles,” will help the company hedge against market volatility, Hoplamazian said.
“During the 2008 financial crisis, a 1% drop in RevPAR led to a nearly 2.5% drop in adjusted EBITDA due to our higher mix of owned and leased earnings. Today, as we benefit from a greater asset-light earnings mix, we anticipate a 1% change in RevPAR would lead to an approximate 1.4% change in adjusted EBITDA,” he shared.
Hyatt is currently making progress to sell several of its properties, including one that is under a signed purchase and sale agreement, two that are under a letter of intent and three hotels under a formal marketing process, Hoplamazian shared. The hotel company is also under contract to sell Hyatt Grand Central New York, though the sale is not expected to close this year.
