Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=200537
Story Retrieval Date: 4/17/2015 11:31:04 AM CST
Hyatt earnings soared due partially to a large tax refund.
Tax credit helps Hyatt earnings
Net income for Hyatt Hotels Corp. jumped in the fourth quarter.
Hyatt Hotels Corp.’s fourth-quarter earnings rose sharply, aided by a significant tax benefit and growth in the once-ailing business travel sector.
For the quarter ended Dec. 31, the company reported net income of $52 million, or 31 cents per share, compared with $6.0 million, or 3 cents per share, in the year-ago quarter.
Of the $52 million profit, $28 million, or 54 percent, was attributable to a tax refund.
During the company’s conference call with analysts, Chief Financial Officer Harmit J. Singh said the tax credit increased earnings to the tune of 17 cents per share.
Excluding the tax benefit, adjusted net income for the quarter was $24 million, or 14 cents per share, double the $12 million, or 7 cents per share, the company earned last year after figures were revised. Those earnings topped by a penny the expectation of 13 cents per share according to analysts surveyed by Thomson Reuters.
Hyatt and the hotel industry took a hard hit during the recession but began to see a rise in occupancy rates starting toward the end of 2010.
According to Hyatt CEO Mark S. Hoplamazian, business travel was a primary factor in the fourth quarter profit. “Demand from this segment was the primary driver of our results in 2011,” he said.
Revenues increased 7.8 percent to $990 million from $918 million in the year-ago quarter. During the conference call, Singh said that higher revenue in the business travel segment came from increased demand rather than higher room rates.
The company opened seven new properties during the quarter including a Hyatt Regency in New Orleans and a Hyatt House in Philadelphia. The company also increased revenue per available room by 6 percent during the fourth quarter.
The increase in revenue per available room did not meet some analysts’ expectations. “We expected strong momentum in the fourth quarter of 2011. It appears as though results were negatively impacted by continuing renovation disruptions as projects were completed,” David Loeb, analyst with Robert W. Baird, said in a research note.
Management was optimistic about further business improvement in 2012. “Outlook for our company has never been brighter,” Hoplamazian said during the company’s conference call.
Hyatt posted net income for the full year of $111 million, or 67 cents per share, up from 2010 earnings of $51 million, or 38 cents per share. Full-year revenues totaled $1.88 billion, up 1 percent from $1.86 billion in 2010.
The stock closed unchanged at $42.84 Thursday.