Hyatt Hotels Corp. (H:US) rose the most in 20 months after the chain controlled by the Pritzker family said second-quarter profit jumped as travel demand climbed at its U.S. properties.
Net income climbed to $112 million, or 70 cents a share, from $39 million, or 24 cents, a year earlier, the Chicago-based company said today in a statement. Hyatt rose 6 percent to $45.25 at the close in New York, It was the biggest gain since November 2011.
Hyatt is benefiting from increased demand by individual business travelers and vacationers, especially in North America, which accounts for two-thirds of the company’s operating income, according to Nikhil Bhalla, an analyst at FBR & Co. (FBRC:US) in Arlington, Virginia.
“These results should be well-received and potentially represent a key inflection point operationally,” Carlo Santarelli, a New York-based analyst at Deutsche Bank AG, said after the earnings release. Hyatt had better-than-expected revenue per available room, an industry measure of occupancy and rates, said Santarelli, who has a buy rating on the stock.
Second-quarter revpar increased 7.1 percent from a year earlier for owned and leased hotels, and 3.9 percent systemwide, which includes properties managed and not owned by Hyatt.
“Occupancy was at peak levels in several markets,” Chief Executive Officer Mark Hoplamazian said on a conference call with investors. “Revpar was therefore driven by rate increases.”
Adjusted earnings, which exclude items such as gains on the sale of real estate, were $70 million, or 43 cents a share. The average estimate of 23 analysts was 30 cents a share, according to data (H:US) compiled by Bloomberg. Revenue rose to $1.09 billion from $1.01 billion from a year earlier.
“Strong demand in the U.S., particularly in cities like Chicago, which is their home market, helped them,” Bhalla said in a telephone interview before the report.
The hotelier expects Chicago and Orlando, Florida, to be “strong markets” in the future, Hoplamazian said.
Hyatt increased its investment spending outlook for the year to more than $500 million, including an expected $325 million investment in the resort segment.
Marriott International Inc. (MAR:US), the largest publicly traded U.S. hotel chain, is scheduled to report earnings after markets close today. Starwood Hotels & Resorts Worldwide Inc. (HOT:US), owner of the luxury St. Regis and W brands, last week said second-quarter earnings climbed 12 percent from a year earlier, helped by cost cuts and sales of vacation units at the company’s South Florida resort.
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