During Hyatt Hotels Corp.'s third-quarter earnings call, president and CEO Mark Hoplamazian shared additional details about the company's planned acquisition of Two Roads Hospitality, which Hoplamazian said was "two to three weeks away." Hyatt announced plans to acquire the hotel management company in early October. It would add five new brands to Hyatt's portfolio: Alila, Destination Hotels, Joie de Vivre, Thompson Hotels and Tommie.
On the call with analysts, Hoplamazian said the deal aligned well with Hyatt's strategy. Two Roads is "a collection of very strong brands that are performing very well," he said, "but with an embedded pipeline, and we believe that there is significant further growth embedded in these brands globally." The brands sit in a similar average daily rate range as Hyatt's full-service luxury and lifestyle hotels. Two Roads' current customer base "is an enhancement to our current customer base and represents a significant measure of additional opportunities for our existing guest and customer base," Hoplamazian said.
Another appeal of Two Roads is that it's asset-light. During an earnings call in August, Hoplamazian detailed the company's brief interest in acquiring NH Hotels Group. That deal fell apart, but he said then that the company would continue to explore asset-light growth opportunities. Hyatt, which has traditionally owned a greater share of its portfolio than its competitors, is in the process of selling off some of its owned hotels.
After the deal closes, Hyatt's portfolio will expand to 19 brands across more than 800 properties globally, a boost from the more than 750 properties it has currently.
Q3 Results
Third-quarter systemwide occupancy inched up 0.1 percentage points year over year to 77.6 percent, and ADR rose 1.6 percent to $180.80. In the U.S., group room revenue at full-service hotels increased about 5 percent for the quarter, according to CFO Patrick Grismer. That growth "stemmed primarily from associations and small groups, offsetting lower revenue from corporate groups," Grismer said. However, corporate group business looks strong for future periods, he said. Revenue for the transient segment at U.S. full-service hotels was flat for the quarter, owing to displacement from group business. Third-quarter net income increased to $237 million, up from $18 million in 2017, driven by gains from real estate sales.
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