Hyatt Hotels Corp. (H) reported its second-quarter 2010 adjusted earnings of 18 cents per share, higher than the Zacks Consensus Estimate of 8 cents per share. On a GAAP basis, net income per share was 14 cents versus a loss of 34 cents recorded in the comparable quarter last year. The last year’s loss widened due to a hefty one-time charge of 43 cents per share mostly as debt settlement cost. However, in the reported quarter, the one-time charge is 4 cents per share. 


Inside the Headline Numbers

Total revenues rose 4.7% year-over-year to $889.0 million. The RevPAR (Revenue per Available Room) for comparable owned and leased properties jumped 9.6% (up 9.4% on a constant-dollar basis).

International RevPAR increased 21.4% year-over-year (up 17.5% on a constant-dollar basis) due to a hike in average daily rate. 
In North America, comparable full service RevPAR rose 6.8% (up 6.4% at constant dollar). RevPAR at the company’s comparable North American select-service hotels was up 7.8%.

Adjusted EBITDA surged 12.5% from the prior year quarter to $135 million, driven by stronger performance at owned and leased hotels and higher management and franchise fees.

Selling, general and administrative expenses declined 15.9% from the prior year quarter to $58.0 million. However, adjusted selling, general and administrative expenses increased by 4.9% to $64.0 million due to higher incentive compensation costs and professional fees.

The company opened 12 properties during the second quarter of 2010.

Segment Performance

Owned and Leased Hotels: The segment’s revenue grew 5.2% year-over-year to $483 million, due to a rise in occupancy and solid performance at the company’s North America owned and leased hotels. 


North American Management and Franchising: The segment’s revenue spiked 2.6% year-over-year to $361 million, resulting from higher number of properties and rise in hotel revenue. 
International Management and Franchising: The segment’s revenues climbed 25.0% from the prior-year period to $50 million owing to strong performance in Asia–Pacific and Europe, Africa and the Middle East regions with rates up in the low-single-digit percentage range in both regions.

Financial Position

As of June 30, 2010, Hyatt Hotels had cash and cash equivalents of $1.2 billion, total debt of $853 million and short-term investments of approximately $400 million. Additionally, the company also has $1.1 billion under its revolving credit facility.

At the end of the quarter, capital expenditures were $53 million, including $18 million for investment in new properties.

Outlook

The company expects capital expenditure in a range of $270 million to $280 million at the end of fiscal 2010. Depreciation and amortization cost is projected in a range of $285 million to $295 million and interest expense between $50 million and $55 million.

The company said it plans to use cash to buy hotels or even a hotel brand to increase its market share in key markets. Hyatt is also exploring the sale of 11 properties in its portfolio.
 
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