with the expectation that global RevPAR will be between 12 % and 16 % compared to full-year 2022 .
Like its peers , Hyatt continues to push toward a fee-based , asset-light operating model . The company is currently marketing two assets for sale ( a letter of intent has been signed on one of them ) and intends to execute on its plans to realize $ 2 billion of gross proceeds from the sale of real estate by the end of 2024 . As of the end of Q1 , Hyatt has netted $ 721 million from real estate sales .
“ Our focus is on securing longterm durable management contracts ,” Hoplamazian said .
In order to help facilitate transactions , some owners , including real estate investment trusts or REITs , have turned to seller financing to get deals done . Seller financing is a loan provided by the seller of a property to the purchaser and allows the buyer to pay the seller in installments .
When Host Hotels & Resorts sold the 1,780-room Sheraton New York Times Square to MCR and Island Capital in April 2022 for $ 373 million , it provided a $ 250-million bridge loan in conjunction with the sale . Hyatt has yet to entertain this method , but , according to Hoplamazian , would not count it out .
“ We would be open to it for the right asset ,” he said , noting that transaction activity levels have slowed . He said he remains confident it will complete its asset selldowns by the target date .
SUPPLY DOSE The rise in interest rates has made it more difficult to get projects financed and into the construction phase . Approximately 20 % of new construction for Hyatt is in the U . S . with the remainder international . “ Capital formation for new starts is challenging ,” Hoplamazian said , noting specifically how regional and local banks now have backed up their provision of credit .
Despite the current climate , Hoplamazian
Park Hyatt Vienna was renovated out of a former bank and opened in 2014 .
is optimistic that this is transitory . “ More developers are recognizing that confidence in crisis is a short-term phenomenon ,” he said .
Asia-Pacific ’ s overall room count in Q1 was 46 % larger than Q1 2019 , with 70 % of growth in the luxury and upper-upscale segment , Hoplamazian said , including the April opening of Andaz Nanjing Hexi in China . “ Growth is concentrated in the higher scales , which means higher fees ,” Hoplamazian said .
In the quarter , Hyatt introduced a new extended-stay brand for the midscale segment named Hyatt Studios . Hyatt said it has signed letters of interest in development from multiple developers for more than 100 Hyatt Studios hotels , with construction expected to begin this year and the first hotel expected to open in 2024 . Whether these projects get underway will , as Hoplamazian pointed out , depend a lot on how crafty developers are in sourcing capital .
From a performance perspective , lower supply in the market is a boon for operating hotels , which don ’ t have to compete with new stock , allowing them to yield up . New bookings are pacing ahead in average
daily rate versus what ’ s on the books now , Hoplamazian said , adding that non-resort leisure business was up significantly . Business transient travel has recovered 85 % relative to 2019 .
Hoplamazian referred to Europe as a “ a breakout year ” for business with corporate travel there back to 2019 levels .
Mainland China business is up 30 %, driven primarily by domestic travel as the country continues its postpandemic opening .
Hyatt also announced the acquisition of travel platform Mr and Mrs Smith in the quarter for around $ 66 million . The deal is expected to close in the second quarter . The platform contains some 1,500 hotels in the boutique and luxury space , with ADRs in the mid $ 400s , according to Hoplamazian .
It gives current World of Hyatt members access to new hotels outside the Hyatt family , but Hoplamazian stressed the deal won ’ t threaten current Hyatt asset owners . “ We analyzed the hotels that might be adjacent to existing Hyatt hotels ,” he said . “ We are careful how we integrate , but it adds to the network effect . Their customer base looks like ours .”
June 2023 hotelsmag . com 21