Form 10-Q Hyatt Hotels Corp For: Mar 31

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-34521

HYATT HOTELS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware

20-1480589

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

150 North Riverside Plaza

8th Floor, Chicago, Illinois 60606

(Address of Principal Executive Offices) (Zip Code)

(312) 750-1234

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $0.01 par value

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At May 3, 2022, there were 51,289,439 shares of the registrant's Class A common stock, $0.01 par value, outstanding and 59,017,749 shares of the registrant's Class B common stock, $0.01 par value, outstanding.

Table of Contents

HYATT HOTELS CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2022

TABLE OF CONTENTS



	PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	46

	PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49

Signatures		50

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(In millions of dollars, except per share amounts)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
REVENUES:
Owned and leased hotels	$	271	$	104
Management, franchise, and other fees	154		63
Contra revenue	(9)		(8)
Net management, franchise, and other fees	145		55
Distribution and destination management	246		—
Other revenues	77		19
Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	540		260
Total revenues	1,279		438
DIRECT AND SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES:
Owned and leased hotels	210		124
Distribution and destination management	194		—
Depreciation and amortization	119		74
Other direct costs	67		23
Selling, general, and administrative	111		95
Costs incurred on behalf of managed and franchised properties	556		277
Direct and selling, general, and administrative expenses	1,257		593
Net gains (losses) and interest income from marketable securities held to fund rabbi trusts	(31)		12
Equity earnings (losses) from unconsolidated hospitality ventures	(9)		54
Interest expense	(40)		(41)

Asset impairments	(3)		—
Other income (loss), net	(10)		12
LOSS BEFORE INCOME TAXES	(71)		(118)
PROVISION FOR INCOME TAXES	(2)		(186)
NET LOSS	(73)		(304)
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—		—
NET LOSS ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	(73)	$	(304)
LOSSES PER SHARE—Basic
Net loss	$	(0.67)	$	(2.99)
Net loss attributable to Hyatt Hotels Corporation	$	(0.67)	$	(2.99)
LOSSES PER SHARE—Diluted
Net loss	$	(0.67)	$	(2.99)
Net loss attributable to Hyatt Hotels Corporation	$	(0.67)	$	(2.99)

See accompanying Notes to condensed consolidated financial statements.

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HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In millions of dollars)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
Net loss	$	(73)	$	(304)
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of tax of $— for the three months ended March 31, 2022 and March 31, 2021	21		(46)
Unrealized gains on derivative activity, net of tax of $— for the three months ended March 31, 2022 and March 31, 2021	2		2
Unrecognized pension cost, net of tax of $— for the three months ended March 31, 2022 and March 31, 2021	(2)		—
Unrealized losses on available-for-sale debt securities, net of tax of $— for the three months ended March 31, 2022 and March 31, 2021	(7)		(1)
Other comprehensive income (loss)	14		(45)
COMPREHENSIVE LOSS	(59)		(349)
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—		—
COMPREHENSIVE LOSS ATTRIBUTABLE TO HYATT HOTELS CORPORATION	$	(59)	$	(349)

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions of dollars, except share and per share amounts)

(Unaudited)


	March 31, 2022		December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,023	$	960
Restricted cash	47		57
Short-term investments	282		227
Receivables, net of allowances of $56 and $53 at March 31, 2022 and December 31, 2021, respectively	655		633
Inventories	8		10
Prepaids and other assets	154		149
Prepaid income taxes	53		26

Assets held for sale	375		—
Total current assets	2,597		2,062
Equity method investments	209		216
Property and equipment, net	2,525		2,848
Financing receivables, net of allowances of $72 and $69 at March 31, 2022 and December 31, 2021, respectively	57		41
Operating lease right-of-use assets	411		446
Goodwill	3,006		2,965
Intangibles, net	1,880		1,977
Deferred tax assets	14		14
Other assets	1,990		2,034
TOTAL ASSETS	$	12,689	$	12,603
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	6	$	10
Accounts payable	546		523
Accrued expenses and other current liabilities	317		299
Current contract liabilities	1,285		1,178
Accrued compensation and benefits	119		187
Current operating lease liabilities	35		35
Liabilities held for sale	212		—
Total current liabilities	2,520		2,232
Long-term debt	3,815		3,968
Long-term contract liabilities	1,407		1,349
Long-term operating lease liabilities	322		349
Other long-term liabilities	1,101		1,139
Total liabilities	9,165		9,037
Commitments and contingencies (see Note 12)

EQUITY:
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized and none outstanding at March 31, 2022 and December 31, 2021	—		—
Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 51,273,148 issued and outstanding at March 31, 2022, and Class B common stock, $0.01 par value per share, 391,012,161 shares authorized, 59,017,749 shares issued and outstanding at March 31, 2022. Class A common stock, $0.01 par value per share, 1,000,000,000 shares authorized, 50,322,050 issued and outstanding at December 31, 2021, and Class B common stock, $0.01 par value per share, 391,647,683 shares authorized, 59,653,271 shares issued and outstanding at December 31, 2021	1		1
Additional paid-in capital	657		640
Retained earnings	3,094		3,167
Accumulated other comprehensive loss	(231)		(245)
Total stockholders' equity	3,521		3,563
Noncontrolling interests in consolidated subsidiaries	3		3
Total equity	3,524		3,566
TOTAL LIABILITIES AND EQUITY	$	12,689	$	12,603

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions of dollars)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(73)	$	(304)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	119		74


Amortization of share awards	31		32
Amortization of operating lease right-of-use assets	9		8
Deferred income taxes	—		200


Equity (earnings) losses from unconsolidated hospitality ventures	9		(54)



Contra revenue	9		8

Unrealized (gains) losses, net	10		(8)


Working capital changes and other	66		(47)
Net cash provided by (used in) operating activities	180		(91)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities and short-term investments	(195)		(423)
Proceeds from marketable securities and short-term investments	163		523
Contributions to equity method and other investments	(3)		(16)

Acquisitions, net of cash acquired	(39)		(84)
Capital expenditures	(43)		(19)





Other investing activities	7		(12)
Net cash used in investing activities	(110)		(31)
CASH FLOWS FROM FINANCING ACTIVITIES:







Other financing activities	(14)		(14)
Net cash used in financing activities	(14)		(14)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	5		5
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, INCLUDING CASH, CASH EQUIVALENTS, AND RESTRICTED CASH CLASSIFIED WITHIN CURRENT ASSETS HELD FOR SALE	61		(131)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH RECLASSIFIED TO ASSETS HELD FOR SALE	(7)		—
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	54		(131)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—BEGINNING OF YEAR	1,065		1,237

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—END OF PERIOD	$	1,119	$	1,106

See accompanying Notes to condensed consolidated financial statements.

Supplemental disclosure of cash flow information:



	March 31, 2022		March 31, 2021
Cash and cash equivalents	$	1,023	$	1,078
Restricted cash (1)	47		9
Restricted cash included in other assets (1)	49		19
Total cash, cash equivalents, and restricted cash	$	1,119	$	1,106

(1) Restricted cash generally represents debt service on bonds, escrow deposits, and other arrangements.



	Three Months Ended
	March 31, 2022		March 31, 2021
Cash paid during the period for interest	$	30	$	42
Cash paid (received) during the period for income taxes, net	$	8	$	(2)
Cash paid for amounts included in the measurement of operating lease liabilities	$	11	$	9

Non-cash investing and financing activities are as follows:


Change in accrued capital expenditures	$	13	$	—
Non-cash right-of-use assets obtained in exchange for operating lease liabilities	$	1	$	2

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions except share and per share amounts)

(Unaudited)


	Common Shares Outstanding		Common Stock Amount				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests in Consolidated Subsidiaries		Total
	Class	Class	Class		Class
	A	B	A		B


BALANCE—January 1, 2021	39,250,241	62,038,918	$	1	$	—	$	13	$	3,389	$	(192)	$	3	$	3,214
Total comprehensive loss	—	—	—		—		—		(304)		(45)		—		(349)


Employee stock plan issuance	10,992	—	—		—		1		—		—		—		1
Class share conversions	800,169	(800,169)	—		—		—		—		—		—		—
Share-based payment activity	462,103	—	—		—		22		—		—		—		22

BALANCE—March 31, 2021	40,523,505	61,238,749	$	1	$	—	$	36	$	3,085	$	(237)	$	3	$	2,888



















BALANCE—January 1, 2022	50,322,050	59,653,271	$	1	$	—	$	640	$	3,167	$	(245)	$	3	$	3,566
Total comprehensive loss	—	—	—		—		—		(73)		14		—		(59)



Employee stock plan issuance	12,221	—	—		—		1		—		—		—		1
Class share conversions	635,522	(635,522)	—		—		—		—		—		—		—
Share-based payment activity	303,355	—	—		—		16		—		—		—		16

BALANCE—March 31, 2022	51,273,148	59,017,749	$	1	$	—	$	657	$	3,094	$	(231)	$	3	$	3,524

See accompanying Notes to condensed consolidated financial statements.

Table of Contents

HYATT HOTELS CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(amounts in millions of dollars, unless otherwise indicated)

(Unaudited)

1. ORGANIZATION

Hyatt Hotels Corporation, a Delaware corporation, and its consolidated subsidiaries (collectively "Hyatt Hotels Corporation") has offerings that consist of full services hotels, select service hotels, all-inclusive resorts, and other forms of residential, vacation ownership, and condominium units. We also offer travel distribution and destination management services through ALG Vacations ("ALG Vacations") and a paid membership program through the Unlimited Vacation Club. At March 31, 2022, (i) we operated or franchised 519 full service hotels, comprising 171,823 rooms throughout the world, (ii) we operated or franchised 542 select service hotels, comprising 78,419 rooms, of which 445 hotels are located in the United States, and (iii) we operated, franchised, or marketed 111 all-inclusive resorts, comprising 36,152 rooms. At March 31, 2022, our portfolio of properties operated in 71 countries around the world. Additionally, through strategic relationships, we provide certain reservation and/or loyalty program services to hotels that are unaffiliated with our hotel portfolio and operate under other tradenames or marks owned by such hotels or licensed by third parties.

As used in these Notes and throughout this Quarterly Report on Form 10-Q:

•"Hyatt," "Company," "we," "us," or "our" mean Hyatt Hotels Corporation and its consolidated subsidiaries;

•"hotel portfolio" refers to our full service hotels, including our wellness resorts, our select service hotels, and our all-inclusive resorts;

•"properties," "portfolio of properties," or "property portfolio" refer to our hotel portfolio and residential, vacation ownership, and condominium units that we operate, manage, franchise, own, lease, develop, license, or to which we provide services or license our trademarks, including under the:

◦Park Hyatt, Miraval, Grand Hyatt, Alila, Andaz, The Unbound Collection by Hyatt, Destination by Hyatt, Hyatt Regency, Hyatt, Hyatt Ziva, Hyatt Zilara, Thompson Hotels, Hyatt Centric, Caption by Hyatt, JdV by Hyatt, Hyatt House, Hyatt Place, UrCove, Hyatt Residences Club brands; and

◦Secrets Resorts & Spas, Dreams Resorts & Spas, Breathless Resorts & Spas, Zoëtry Wellness & Spa Resorts, Vivid Hotels & Resorts, Alua Hotels & Resorts, and Sunscape Resorts & Spas brands (collectively the "AMR Collection"); and

•"hospitality ventures" refers to entities in which we own less than a 100% equity interest.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q, and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. As a result, this Quarterly Report on Form 10-Q should be read in conjunction with the Consolidated Financial Statements and accompanying Notes in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Form 10-K").

We have eliminated all intercompany accounts and transactions in our condensed consolidated financial statements. We consolidate entities under our control, including entities where we are deemed to be the primary beneficiary.

Management believes the accompanying condensed consolidated financial statements reflect all adjustments, which are all of a normal recurring nature, considered necessary for a fair presentation of the interim periods.

Table of Contents

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Adopted Accounting Standards

Government Assistance—In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2021-10 ("ASU 2021-10"), Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. ASU 2021-10 requires annual disclosures that are expected to increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity's financial statements. The provisions of ASU 2021-10 are effective for fiscal years beginning after December 31, 2021, and we adopted ASU 2021-10 on January 1, 2022. We are currently evaluating the impact of ASU 2021-10 on our annual disclosures and do not expect a material impact to our consolidated financial statements.

Future Adoption of Accounting Standards

Reference Rate Reform—In March 2020, the FASB issued Accounting Standards Update No. 2020-04 ("ASU 2020-04"), Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional expedients and exceptions that we can elect to adopt, subject to meeting certain criteria, regarding contract modifications, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform. The provisions of ASU 2020-04 are available through December 31, 2022, and we are currently assessing the impact of adopting ASU 2020-04.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Revenues

The following tables present our revenues disaggregated by the nature of the product or service:


	Three Months Ended March 31, 2022
	Owned and leased hotels		Americas management and franchising		ASPAC management and franchising		EAME/SW Asia management and franchising		Apple Leisure Group		Corporate and other		Eliminations		Total
Rooms revenues	$	167	$	—	$	—	$	—	$	—	$	—	$	(6)	$	161
Food and beverage	69		—		—		—		—		—		—		69
Other	41		—		—		—		—		—		—		41

Owned and leased hotels	277		—		—		—		—		—		(6)		271

Base management fees	—		46		8		6		8		—		(8)		60
Incentive management fees	—		12		4		7		19		—		(2)		40
Franchise fees	—		34		—		1		—		—		—		35
Other fees	—		3		2		1		3		10		—		19


Management, franchise, and other fees	—		95		14		15		30		10		(10)		154
Contra revenue	—		(6)		(1)		(2)		—		—		—		(9)
Net management, franchise, and other fees	—		89		13		13		30		10		(10)		145

Distribution and destination management	—		—		—		—		246		—		—		246
Other revenues	—		38		—		—		34		4		1		77

Revenues for the reimbursement of costs incurred on behalf of managed and franchised properties	—		461		29		21		29		—		—		540

Total	$	277	$	588	$	42	$	34	$	339	$	14	$	(15)	$	1,279

Table of Contents


	Three Months Ended March 31, 2021
	Owned and leased hotels		Americas management and franchising		ASPAC management and franchising		EAME/SW Asia management and franchising		Corporate and other		Eliminations		Total
Rooms revenues	$	62	$	—	$	—	$	—	$	—	$	(3)	$	59
Food and beverage	20		—		—		—		—		—		20
Other	25		—		—		—		—		—		25
Owned and leased hotels	107		—		—		—		—		(3)		104

Base management fees	—		16		8		3		—		(3)		24
Incentive management fees	—		1		5		2		—		—		8
Franchise fees	—		17