Hyatt at Raymond James Conference: Asset-Light Strategy and Record Growth

Hyatt Hotels Corporation (NYSE: H) presented a strategic overview at Raymond James & Associates’ 46th Annual Institutional Investors Conference 2025, held on March 4. The company highlighted its successful shift to an asset-light model, delivering record growth across various metrics, while also addressing future challenges. Despite positive results, Hyatt faces the task of maintaining momentum amid global economic uncertainties.

Key Takeaways

• Hyatt has successfully transitioned to an asset-light business model, achieving record growth in rooms, fees, and loyalty memberships.
• The company returned $1.25 billion to shareholders in 2024, surpassing its free cash flow.
• Hyatt’s acquisition of Playa Hotels and Resorts is set to enhance its asset-light strategy and expand its portfolio in Latin America and The Caribbean.
• Hyatt anticipates global RevPAR growth of 2% to 4% and net rooms growth of 6% to 7% in 2025.
• The World of Hyatt loyalty program has grown substantially, with a 20% increase in the past year.

Financial Results

• Shareholder Returns: In 2024, Hyatt returned $1.25 billion to shareholders, exceeding its free cash flow.
• RevPAR Growth: The company projects a global RevPAR growth of 2% to 4% for 2025.
• Net Rooms Growth: Expected net rooms growth ranges from 6% to 7% in 2025.
• Gross Fee Growth: Gross fee growth is anticipated to be 10% to 11% over 2024 levels.
• Adjusted EBITDA Growth: Adjusted EBITDA is projected to grow by 10% to 11% in 2025, considering asset sales.

Operational Updates

• Playa Hotels & Resorts Acquisition: Hyatt has initiated a tender offer to acquire Playa Hotels & Resorts for $13.50 per share in cash, with the acquisition expected to close in late 2025, adding over 20 all-inclusive resorts.
• Asset Disposition Strategy: Hyatt plans to sell the real estate portfolio acquired from Playa, maintaining its asset-light position, aiming for over 90% by 2027.
• Brand Expansion: The company has launched Tidus Studios in the upper mid-scale segment and Hyatt Select as a conversion brand.
• Venetian Addition: The inclusion of the Venetian in Las Vegas is seen as a strategic move to enhance distribution and attract group and transient customers.
• World of Hyatt Program: The loyalty program has grown by over 20% year-over-year and 27% compounded over seven years.

Future Outlook

• Continued Capital Returns: Hyatt remains committed to returning capital to shareholders via dividends and share repurchases, with the exception of the COVID-impacted year.
• Growth Strategy: The company focuses on creating a network effect by expanding in strategic locations and categories.
• Travel Demand: Hyatt expects continued strength in business transient, leisure, and group travel segments, with positive momentum in China and strong demand in Asia and Europe.

Q&A Highlights

• Asset-Light Model: Since 2017, Hyatt’s disposition program has realized $5.6 billion in proceeds, reinvesting $4.6 billion into asset-light platforms.
• Unit Growth and Pipeline: Hyatt identifies significant opportunities for expansion in secondary and tertiary markets.
• Venetian Integration: The addition of the Venetian has attracted significant interest from group and transient customers through World of Hyatt channels.
• World of Hyatt Program Growth: The program’s expansion is driven by investments in member benefits and acquisitions like Mr and Mrs Smith.
• Capital Allocation: Hyatt continues to prioritize returning capital to shareholders, maintaining its dividend program.

Readers are encouraged to refer to the full transcript for a more detailed analysis.

Full transcript - Raymond James & Associates’ 46th Annual Institutional Investors Conference 2025:

Archie Milligan, Equity Research, Raymond James: Good morning, everybody. Thank you for attending today. My name is Archie Milligan with Equity Research at Raymond James, and we are pleased to present Hyatt Hotels. And with that, I’m going to turn it over, and we’re going to do a short introduction of the company, and then I’d like to do some Q and A and make it as open and dynamic of a conversation as possible. So with that, I’ll turn it over to you guys.

Thank you so much.

Unidentified speaker: Thanks, RJ, and, thank you everybody for your interest in Hyatt. Thanks for the invitation to the conference. We’ve always had a really good, level of engagement here at the room and Jane conference. For those of you who don’t know Hyatt, and actually this presentation that I’m sharing is posted on our website effective as of this morning. We are focused.

We’re a hospitality company in 79 countries around the world focused on the high end traveler, over 1,400 properties, almost 350,000 rooms. We are the number one largest provider manager of luxury branded rooms in resort locations, and we have a record number of rooms in our pipeline. So lots of growth, to realize in the coming years. This is our brand portfolio. We recently realigned this portfolio to serve our customer bases along each of these main portfolio groups, and, happy to talk about that more if you’re interested.

The investment considerations for Hyatt, we have now, after seven years of an asset light transformation, arrived at a at a asset light, business model. And we are and have been delivering record performance on on many metrics, including rooms, level of rooms growth, level of fee growth, pipeline growth, and our loyalty membership growth, at a faster rate than our largest competitors. And that record performance is leading to, greater and greater levels of free cash flow. Our global portfolio brands serve the high end traveler in each segment that we serve as, as I laid out in the previous slide through our brand categories. And our capital allocation strategy is driving growth and shareholder returns.

You can see here that, in 2024, we returned $1,250,000,000 to shareholders, well in excess of our free cash flow numbers reported for 2024. And a portion of that was, driven by our asset sale proceeds as part of our disposition commitment that we’ve made. Our outlook for this year is is solid. It’s a strong outlook with respect to RevPAR growth between 2% to 4% globally, and our net rooms growth largely comprised of organic growth between 67%. Gross gross fees, very healthy rate of fees growth, as a combination of our RevPAR and our NetRooms growth, at the midpoint between 1011%, over 2024 for 2025, and adjusted EBITDA, adjusted for asset sales that we sold last year.

So the earnings that that we had last year from asset sales removing those, we will be in the 10 to 11% range on EBITDA growth. One thing I wanted to make sure that I covered is a recent announcement that we made to acquire Playa Hotels and Resorts. The the deal rationale, all of this that’s provided on this page has been provided in in public filings or in our, press release. But just to reiterate the strategic rationale for the deal, this continues to strengthen our asset light mix. As you can see here on our first, point on the left hand side of this slide, we have in the portfolio several Hyatt brands already existing in the and so converting those to management contracts upon our acquisition is, is accretive to our fee based earnings in addition to converting some of the existing third party brands to Hyatt brands upon closing.

We expect for our asset sale or excuse me, our asset light earnings mix to exceed 90% by 2027, and, that is with the assumption that, the the assets that we acquire upon closing Playa are sold by that time period in addition to existing Hyatt assets that we intend to sell as well. The second point here is that the the transaction expands our ability to deliver our existing own distribution channels to those, to that portfolio of of properties that we will acquire upon closing. And so that’s incremental earnings for us as well. And then finally, we have almost a hundred all inclusive properties in Latin America and The Caribbean, so a significant amount of scale and, leadership and management teams in that region. And so you can imagine there’s significant economies of scale, bringing this portfolio into our portfolio.

So all of those, components lead to a a great deal of shareholder value creation, for the transaction. On the right hand side, we have, filed a tender offer for the shares that was completed last week. I I wanted to point out one thing on this slide, which is, in the final bullet point on the right hand side is that I mentioned that we intend to, and this has been a long term part of our m and a strategy and our growth strategy, that anything we acquire would either be asset light or we would have a path towards asset light, ultimately in the acquisition itself. And this this opportunity is no exception. We have been in conversations with, with investors for the sale of the the real estate portfolio that exists with Playa today.

And we have, with multiple investors, actually three in three different investors. And we have entered into exclusive negotiations with one investor, for the real estate. So we have always been committed to under these, acquisitions of of maintaining our asset light position, and we expect to be 90 asset light by 2027. That could be accelerated, should this these negotiations go the way get finalized soon after our closing. In And so we plan to continue to do that, returning while returning excess cash to shareholders and also committing to an investment grade profile.

And expecting into the future, our our world class, loyalty program, which is also award winning, has is is serving the high end traveler in each segment that we serve, and it’s really driving commercial results. It has grown over 20% in the last year and 27% on a compounded basis for the last seven years. So, huge, huge expansion of our World of Hyatt membership program. Our growth strategy is really focused on building network effect, and that means building in locations and categories that intentionally build our growth where guests are traveling from and guests are traveling to. And so that network effect, has been very successful for us thus far, and we continue to be focused on it.

And again, I mentioned this a couple of times, our asset light mix and, that ability to get over 90%, we feel confident, after the sale of the real estate by 2027 from the acquisition and also from our existing portfolio, which will deliver increasing levels of free cash flow for, for Hyatt and for our investors. And with that

Archie Milligan, Equity Research, Raymond James: Great. Thank you so much. So first, I’ll open it up and see if there’s any questions learned. And I think to get to the 90% by 2027, what do you need to what do you need to do?

Unidentified speaker: Well, we began the disposition program in 2017, and we had a a strategy now that we had built at that time in 2017. We had built a development organization and a pipeline that we felt confident was going to build our room base and take advantage of the incredible white space that Hyatt had globally around the world. So that development organization in place at the time, we realized the value of our real estate and on our balance sheet, we could really unlock and invest in growth into, into asset light platforms. And so began with a commitment, and each of our commitments that we’ve made, three over time, and we we recognized $5,600,000,000 of proceeds through 2024, from 2038 to 2024. And we realized proceeds added over 15 times multiple.

So unlock the value in the real estate at exceptionally high multiples on on the real estate values and retained a contract in every single, every single asset that we sold, in every single location where we sold an asset. So that those proceeds then reinvested into growth platforms. And we invested $4,600,000,000 into asset light platforms and have grown our room base by 50% over that time period. So, you know, I talked about network effect. As we thought about where our customers want to go and where our members want to travel, a significant portion of our investments have been made in luxury, lifestyle, and resort portfolios, whereby that’s been the direction of the consumer preference, and that’s been the direction of our expansion, which is why our World of Hyatt program has grown so significantly over that period of time.

We’re really looking at where our guests want to travel and where we might welcome new members to the program to build the network globally.

Archie Milligan, Equity Research, Raymond James: And so as you move to this asset light model, obviously, a greater emphasis on unit growth. Can maybe you give us a little bit more detail, talk about the pipeline? How is it sourced? What does the current pipeline look like? And how do you maintain that longer term growth rate?

Unidentified speaker: Sure. What you know, Hyatt is is a company that has a very, very great brand reputation, and that name punches far above its weight in our size. And when you look at the white space that we have globally and consider certain markets so we we did the data. And if you if you look at hotel markets where we have a hotel, we have on average four hotels in those markets. This is global.

This is a global number. Our competitors have 14 in those markets. So our ability to grow, we’ve we I just reported eight consecutive years of industry leading net rooms growth. We should. We should, frankly, because we have more opportunity.

And in those markets, developers and owners are attracted to Hyatt because they recognize that they can be tapping in to our high quality membership base, and they would not be, you know, diluting their customer acquisition by multiple properties of a competitor brand. So that’s where we have lots of opportunity. We just two years ago launched Tidus Studios in the upper mid scale place in the upper mid scale space, and that is positioned in markets presently, our opportunities throughout The US, to really meet our existing members where they are they are going to markets and they can’t find us. So that was because we just didn’t have a a product at a price point that that developers could build and our and our existing members could stay at. So when you think about opportunity, think about white space for Hyatt, and think about us being very proactive about where we can build that network and where we have the greatest opportunity.

Hyatt Studios is one of them. Hyatt Select is a brand that we just announced last week, which is primarily a a conversion brand. So think about that as a brand and an opportunity for us to con to your question about continuing to grow. We are being very thoughtful about what we add to the brand portfolio. This brand is is a primarily conversion brand, could be, again, at the at the high end of the upper mid scale segment, tailored to the transient consumer, where Hyatt Studios is tailored to the extended stay consumer.

And in this space, in those same markets I was talking about, we might have conversions from some of our brands, some of competitor brands, and even maybe brands that are moving up the chain scale because they’re gonna invest into a higher product because it’s a Hyatt and they have, again, that opportunity to reach the Hyatt consumer.

Adam: Yes. I think that plus the fact that as we’ve done acquisitions over time, we’ve been really focused on, whether it was standard, ALG, portfolios that have a strong embedded pipeline already. So we weren’t just buying rooms that existed today, but also had an ability to have rooms that would come into the portfolio over time and put our development engine behind it to ensure that we could really leverage our infrastructure to drive future growth. So whether that’s going back to Two Roads with the brands that we acquired in 2018 all the way through our most recent acquisition with Standard in the fall of last year. We feel really good about ensuring that the brands that we have today along with the new brands that we’ve recently launched are positioned in a way that they’ll grow for a very long period of time.

And if you look at the slide that Joan showed with our brand organization, we’ve talked a lot about how we care for each of our brand families and the brands that sit in essentials or sit in classics. We know we can scale those across the markets where we have this vast white space, especially in secondary and tertiary markets and care for luxury and lifestyle and inclusive very differently where they’re very unique brands. They require a certain bespoke approach to ensure that our owners are getting the returns that they desire and our guests are ultimately getting an experience that meets their needs. So very focused and intentional across the brand portfolios as well.

Archie Milligan, Equity Research, Raymond James: And I think that’s probably a good point to bring up the recent addition of the Venetian. Can you talk about the thought process there?

Adam: Yes. For us, it was an exceptional opportunity to be on The Strip in Las Vegas and to add to the existing distribution that we already had in the market. When you look at the Venetian, when you look at the Hyatt brands, I think we felt like they were a really good fit together. We’ve seen tremendous interest already in the, gosh, six weeks or so since the Venetian and Hyatt linked up together through our World of Hyatt distribution channels. We’ve seen great interest from group customers, which we felt like would be the real bread and butter for us to be able to deliver to Venetian a different type of customer and for our guests who wanted to go to Vegas but didn’t necessarily have the right location or the right hotel to be able to do so.

And on top of that, we’ve seen really great interest from transient customers as well who are just booking through World of Hyatt and really excited about the opportunity to stay at that hotel in that market in that location. We expect that this will be a very mutually beneficial arrangement for a long period of time. We’ve talked about the fee structure where we earn fees on the business that we deliver through our channels and that will ramp over time as we deliver more and more group opportunity. But so far, very happy with the results.

Archie Milligan, Equity Research, Raymond James: That’s great. So before we get into some of the travel trends and questions we have there, any questions? Okay. Let’s move to travel trends. Can you maybe just talk about high level, what you’re seeing in terms of demand and the consumer?

And then maybe talk about each segment, leisure, business transient,

Unidentified speaker: group. Sure. Maybe I’ll start and then Adam, you could fill in anything I missed. We are really encouraged right now by what we’ve seen. We talked about it going into the fourth quarter of twenty twenty four, you know, there was really some uncertainty.

Ending the third quarter of twenty twenty four, there was some, you know, what what is going to play out with respect to the election. And we anticipated that, you know, we could see either outcome. And what we saw was continued strength in business transient. We saw leisure being very strong in the fourth quarter, and we saw pacing into the first quarter for leisure. We have some visibility into booking windows, for leisure a little bit further out, business transients a little bit closer in.

And group really has has been very strong. Our pace for this year, for 2025, is up 7%. And that’s off of a year that was already 5% in 2024 over the previous year. So each of the segments of our business, our customer groups, are all demonstrating strong demand and continued momentum. The so it started off the year it started off the year strong.

And when you look across the world geographically, it’s really across the world. And we’re we’re even seeing we mentioned in our fourth quarter call that China has picked up. The momentum in China has picked up in the fourth quarter, and we saw that continue into January. So, that was that was an area that was, you know, maybe pulled back a little bit in the second and third quarter of last year. So, we’re seeing those that travel demand come back too, and some of the areas of strength, outside of China Greater China in in Asia continues to be strong and Europe as well.

So we’re really encouraged when we look across the world.

Adam: Yes. I think the thing that is clear is, especially within higher end customers, travel remains something that is being prioritized, whether it’s for leisure. I mean, if you think about leisure, we’re lapping several years of very strong performance. So the rate of growth is just going to be more moderate than what was a couple of years ago. Whereas business travel, people individual business travel, people are getting out on the road more so than they’ve ever been.

There’s still a little bit of a catch up. And we see the benefits of more companies returning to the office because when you’ve got someone in the office, you now have clients that are going to meet with them or vice versa. So we’ve really seen that strong demand in business travel accelerate really from post Labor Day twenty twenty three has continued onward and then Group just continues to be a really nice segment for us and will continue to be. And that really is holding true to Jones Point everywhere. There’s not markets where we’re seeing contraction maybe with the exception of China’s kind of more moderate growth, but looking better each month.

Unidentified speaker: Yes. And to your point about business travelers getting back on the road, the group is a big proportion of that is corporations getting groups together and getting people together like we are today. So, you know, that is, that’s just an indication of how corporate and leisure are both very healthy right now and what we’re seeing with respect to demand.

Archie Milligan, Equity Research, Raymond James: And let’s take some questions.

Adam: He’s going to keep asking. Don’t push it, guys. Come on.

Archie Milligan, Equity Research, Raymond James: I can wait. Can you talk about the World of Hyatt program? And obviously, it’s a big differentiator for you guys and how you see the value, how you see that growing.

Unidentified speaker: Yep. I talked a little bit about the numbers, the 22% year over year and 27 on a compounded growth rate over seven years. And, you know, really, what we’ve done and what we’ve been very committed to is investing in the benefits of the program. And that’s a differentiator for Hyatt that, we believe in the flywheel. If we invest in the program and invest in the benefits for our members, they stay more and spend more at our properties, and that is obviously very attractive to our ownership base.

Right? So this and and then creating so so so investing in the program and making it really a differentiator is, super attractive to our members. And the network effect with respect to our growth strategy and being very intentional about that is really about providing those members more opportunities to to to stay with us in places where we aren’t today. One example is, we acquired this platform, mister and missus Smith, as it’s completely asset light platform. It allowed us to enter I won’t the the number of markets off the top of my head.

Dozens and and dozens, maybe hundreds of markets around the world, but many markets in Europe where we weren’t deeply penetrated. And so that what what’s incredible about the program is those became available to our members, those those, properties under the mister and missus Smith portfolio. Again, totally asset light acquisition. And what we saw was an incredible demand coming from our members, and the owners love that because we the high the high end of each segment that we serve, those are, you know, the high income demographic staying at their properties, and they paid for their stays in a greater proportion than we had even anticipated. So this wasn’t about just about redemptions.

This is about the network we’re creating and the way that we are building an entire global network for our members, again, to deepen and then to expand with them. So I think it speaks to the quality of our membership base and how they want to continue to grow with us, by entering the program because we’re entering all these new spaces. And so we think we see this growth continuing to be very strong for us as we continue to execute on our growth strategy and continue to invest in the program.

Archie Milligan, Equity Research, Raymond James: And so you briefly touched on, all of the capital you guys have returned to shareholders, but can you just talk about the future return of capital to shareholders, how you think about the balance sheet going forward?

Unidentified speaker: When I referred to our capital allocation strategy, we are committed to continuing to return capital to shareholders. We do have a dividend that we remain committed to and we will be returning capital to shareholders. We are we didn’t give we didn’t provide guidance this year at our fourth quarter earnings call, but, we have returned capital every year except for one year where we were prohibited during COVID. So that will be that will be a, commitment you’ll see us continue to to deliver on.

Archie Milligan, Equity Research, Raymond James: And before we conclude, any questions from the group? Okay. With that, thank you guys so much for coming, and we appreciate you guys having here. Great.

Unidentified speaker: Thank you.

Adam: Thank you all.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.