by Donna M. Marbury/MEDILL
Aug 01, 2012
Standard & Poor’s Rating Services stated that the common stock repurchases did not impact its rating for the hotel chain, but mentioned concern over future strategies. “If Hyatt pursues additional share repurchase authorizations or material additional debt-financed acquisitions over the next 12 to 24 months in a manner that we believe would drive leverage above 3x [times] on a sustained basis, we may consider a lower rating,” S&P stated in a press release.
“We view the operating results and the authorization favorably and [it] should improve investor sentiment from here, which has been awful since it reported [first-quarter] results,” said J.P. Morgan in a report.
The international hotel chain, based in Chicago, earned $39 million in the quarter ending June 30, 2012, compared to $37 million during the same period last year.
During a conference call Wednesday morning, Mark S. Hoplamazian, president and CEO of Hyatt, said that worldwide and domestic increases in short-stay travelers boosted the hotel’s profits. Hyatt’s revenue per available room (RevPAR), an indicator of occupancy and cost per room in the industry, increased both in North America and overseas.
“RevPAR increased over eight percent in North America as we experienced strong transient demand,” Hoplamazian said. “Most of our hotels in China continued to show solid results, with a sequential increase in year-over-year RevPAR growth for comparable hotels in the second quarter. In addition, results from our hotels in Europe, which are primarily located in gateway cities such as Paris and London, remained good, despite the economic uncertainty in the wider region.”
Hyatt opened five properties in the second quarter: one internationally in Mexico City; and four others in New Orleans’s French Quarter, Chicago’s Magnificent Mile, in Boston suburb Braintree and in downtown Riverside, California. “The company is well positioned to take advantage of growth opportunities, as our balance sheet remains strong. Our organizational realignment is progressing well and slated for completion during the fourth quarter of 2012,” Hoplamazian said, adding that that the company plans to open more than 20 new hotels this year.
As of the end of the afternoon Wednesday, the company’s shares increased slightly to $36.79 from $36.65 on Tuesday.