Hyatt’s Annual Report: 5 Things We Learned

Hyatt is one of the world’s fastest-growing hotel groups, and we found a handful of notable details in its annual 10-K filing.

1. Hyatt paid a bit more for Mr & Mrs Smith than previously publicized.

In April 2023, Hyatt announced it would buy the boutique hotel booking site Mr and Mrs Smith for £53 million — or about $66 million based on exchange rates at the time.

The 10-K reveals Hyatt paid a bit more in the end, namely, cash of £58 million (about $72 million using exchange rates at the time). It attributed the change to “customary adjustments” to things such as “net working capital” and “value accrual.”

Separately, Hyatt revealed that it paid $5 million in legal and vetting costs to close the deal. UPDATE: A Hyatt spokesperson says “These are transaction costs primarily related to regulatory, financial advisory, and legal fees.”

The 10-K also outlined the profit margins of Mr and Mrs Smith. Between June 2 and the end of the year, the site generated $2 million of net income on $15 million in total revenues.

2. Hyatt finalized the price of its Dream Hotels acquisition.

In November 2022, Hyatt announced its plan to buy Dream Hotels for $125 million in cash. It acquired brand rights — plus management contracts for a dozen hotels. It also retained an option to spend an unspecified additional amount for other assets.

The latest 10-K shows Hyatt paid an additional $107 million for signed long-term management agreements for planned hotels. UPDATE: A Hyatt spokesperson says, “This is an accounting recording, not a payment. It relates to the economics of the transaction that we disclosed at the time of the announcement – in addition to the $125 million, an additional $175 million of contingent consideration could be paid through 2028 upon the achievement of certain milestones related to the development of additional hotels and/or potential new hotels previously identified by the sellers.”

The filing also suggests how profitable Dream Hotels is. Between when the deal closed on February 2, 2023, and year-end, the dozen Dream Hotels produced $4 million in net income off of $7 million in revenue.

Hyatt paid $7 million in fees to close the acquisition. UPDATE: A Hyatt spokesperson says “These are transaction costs primarily related to regulatory, financial advisory, and legal fees.”

3. Hyatt expects to sell more assets this year.

In 2021, Hyatt said it would target $2 billion in gross proceeds from selling real estate by the end of 2024.

The company has realized $961 million of those planned proceeds. For example, on February 9, 2024, it sold the Hyatt Regency Aruba Resort Spa and Casino for $240 million, including $41 million of seller financing. Hyatt now has a long-term management agreement for the property.

Hyatt said it’s marketing another asset for sale and is “engaged in off-market discussions for two other assets.” The sales fit in with the company’s goal of becoming more “asset-light.”

4. Hyatt’s workforce has evolved.

As of December 2018, Hyatt managed 139,000 workers — of which about 54,000 were Hyatt employees.

In the intervening five years, it has increased its portfolio from 850 to 1,300 hotels and all-inclusive resorts.

Yet its latest 10-K says it manages 206,000 people now — of which it directly employs 51,000.

CORRECTION: This item originally said Hyatt had a lower staff-to-guest ratio, on average after the pandemic than before, but it cited the wrong numbers for its workforce counts and hotel counts..

5. Hyatt warned investors about AI risks for the first time.

Hyatt’s latest 10-K is its first to include language that acknowledges risks for its use of artificial intelligence (AI).

It noted that using AI “creates opportunities for the potential loss or misuse of personal data.” That, in turn, “may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims.”

In light of Air Canada being asked to refund a passenger who said he got bad advice from a chatbot on the airline’s website, it’s notable that Hyatt is now warning that “the content, analyses, or recommendations that AI programs assist in producing are or are alleged to be deficient, misleading, inaccurate, or biased, our business, financial condition, and results of operations and our reputation may be adversely affected.”

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

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