Hyatt slides as room-growth outlook disappoints; Mideast and Mexico pressures linger

By Anshuman Tripathy

July 30 (Reuters) - Shares of ‌Hyatt Hotels fell ​9% ​on Thursday after the company lowered its annual net rooms growth forecast, and flagged a hit from the Middle East conflict and unrest ‌in Mexico during the second quarter.

Like rival Hilton, Hyatt saw strength ⁠in its luxury and upper upscale brands but said geopolitical tensions in the Middle East shaved ‌off about 110 basis points from ‌second-quarter room revenue growth.

"We continue to expect hotel revenues in the Middle East to remain significantly below last year, which we estimate will reduce full-year fees ​by about $10 million," said CFO Joan Bottarini.

Resilient travel demand especially from affluent guests, along with a short-term boost from the FIFA World Cup, has helped ⁠hotel operators offset revenue drags from international operations.

Hyatt, however, signaled pressure in Mexico after a wave of violence ​swept the region earlier this year following the killing of cartel boss "El Mencho," saying booking trends had improved sequentially but the recovery ​was "slower than previously anticipated."

Bottarini said Mexico would impact ‌by about $15 million on fees.

ROOMS GROWTH UNDER PRESSURE

CEO Mark Hoplamazian said Hyatt was taking a measured view on the timing of ⁠openings later this year.

The Chicago-based hotel operator now expects full-year net growth in rooms of about 6%, compared with its previous forecast of 6% to 7%.

"The better-than-expected quarter and accelerating ⁠revenue per available room (revPAR) growth for rest of the year are offset by the deceleration in ​net unit growth for 2026, which should result in a negative reaction in the shares," said Jefferies analyst David Katz.

The room growth metric was a more prominent driver of valuation for ‌Wall Street than revPAR, and was likely to draw an "outsized reaction", Katz added.

Analysts at J.P. Morgan also attributed the share decline ‌to Hyatt's reduced net rooms growth forecast, which the company said was revised to reflect ⁠the "weighting of expected openings" over ‌the rest of the year.

Hyatt's ​shares were trading around $168, having risen nearly 12% so far this year.

(Reporting by Anshuman Tripathy in Bengaluru; Editing by Diti Pujara and ‌Maju Samuel)

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