Hyatt Moves to Sell $1.5 Billion in Real Estate

Date: November 2017

Location: Global


In a move that sent Hyatt Hotels Corporation stock soaring to an all-time high, the company recently reported better than expected earnings while also unveiling a plan to sell many of its hotels.

Hyatt, HQ in Chicago has revealed a new plan to sell $1.5 billion of its real estate over the next three years, in a major and significant move that will free up cash that will then be returned to the company’s shareholders.

This marks a new strategy for a hospitality company that in recent years has become known for an asset recycling strategy, wherein it sells properties before subsequently reinvesting the money into buying more hotels in markets where real estate is less expensive.

This new move, however, seems to be a clear indication that Hyatt is instead going to be deploying an asset light strategy, which has become commonplace for companies of its size throughout the hospitality industry in recent years.

The company has also recently reported adjusted earnings EBITDA of $180 million in the third quarter, which is a 6.7 percent drop from the year earlier period yet still higher than analysts’ initial estimates of $173 million.

This beating of expectations sparked a jump in the company’s stock to an all-time high of $66.84, which is more than $3 higher than its previous record high of $63.74, which it set back in September of 2014.

THPT Comment: Hyatt will keep long-term management or franchise agreements, thus fitting it into the asset light way of operating within the hospitality space, as the other majors have, such as IHG, Hilton, Marriott etc.

It is significant that Hyatt has started to move this route, because the company owns a higher percentage of its own hotels than most of its competitors own. This has long tied up a lot of the company’s money in physical assets, leading to its shares trading at a lower rate than many of its peer companies.

Still, Hyatt owns or leases 44 hotels and resorts that total 19,784 rooms, which makes up about 11 percent of its 180,060-room portfolio.

First Seen: Tophotelnews