Hyatt Hotels Corporation has withdrawn its previous 2020 outlook as a result of the COVID-19 outbreak.
Jefferies analyst David Katz said that the withdrawal of guidance was likely to be followed by similar actions within the sector.
Hyatt had forecast full year, adjusted Ebitda of approximately $760m to $780m, with system-wide revpar growth expected to be between a drop of 0.5% and growth of 1.5%.
CFO Joan Bottarini told analysts last month: “We continue to expect revpar growth in the US to be a bit lower than revpar growth internationally. And expect select-service revpar growth in the US to lag full-service growth.”
Commenting on the impact of the coronavirus outbreak, the company has closed 26 of its hotels in Greater China and said that many others remained open but running at “very low occupancies”. Bottarini said: “There is no question there will be an impact to our results, but it’s simply too early to reasonably quantify what the full year impact to our business in 2020 might be.”
In Asia Pacific overall, excluding Greater China, month-to-date February occupancy was down 32% given the outbound travel and the general restrictions that were in place.
Jefferies said that it expected Katz Hyatt’s first-quarter Ebitda to fall 21.5% to $147m against a previous estimate of a 2.8% drop to a consensus of $178m. The group said: “Ultimately, our Hold rating on Hyatt is predicated on the mixed model and valuations, which are now incrementally more challenged.”
Commenting on the decision to withdraw the outlook, Mark S. Hoplamazian, president & CEO, said: “We are very proud of what our colleagues in the Hyatt family are doing to provide care for our guests, customers, hotel owners, and the communities in which our hotels operate, as the impact of COVID-19 continues to be felt in an increasing number of communities around the world. It is in these types of circumstances that our purpose – to care for people so they can be their best – has the greatest impact.
“This is an evolving situation, and our ability to assess the financial impact of COVID-19 on our business continues to be limited due to quickly changing circumstances and uncertain consumer demand for travel. The 2020 outlook we provided with our fourth quarter earnings announcement was clearly stated as our base case excluding the impact of COVID-19. Since then, we have continued to monitor the situation and, while we remain unable at this time to quantify the full-year impact on our financial results, we believe it is appropriate to withdraw our previously announced 2020 outlook and earnings sensitivity based on Greater China revpar.
“Over the past week, we have seen the outbreak spread beyond Greater China as well as temporary travel restrictions imposed by many companies, resulting in a decrease in near-term transient bookings and an increase in near-term group cancellations in North America and Europe that will impact our full-year outlook and earnings sensitivity. We continue to closely monitor the situation, and plan to provide more information during our first quarter earnings call based on the information we have available at that time.
“We are confident in the resilience and capabilities of our teams to manage through the challenges our industry faces. We continue to care for our colleagues, guests, customers, hotel owners, and the communities in which our hotels operate that have been affected by this public health issue. Our thoughts remain with the individuals and communities affected across the world as the public health response to COVID-19 continues.”