Hyatt Hotels Corp witnessed an increase in quarterly profits due to increased business travel but the company fears troubling economic factors that overshadow future prospects.
“There are still potential headwinds in the short-term from both Europe and a challenging financing services sector,” Mark Hoplamazian, Chief Executive said during the press conference.
At present, the leading leisure chain is making significant renovations at several key hotels due to a strengthening demand in the fourth quarter.
Hyatt witnessed climbing daily rates in fourth-quarter and also said revenue per room available or RevPAR was up 6% at both leased and owned hotels that opened last year.
Morningstar analyst Chad Mollman believes RevPAR, used to measure the health of hotel industry, will be witnessing a downfall because of the economic challenges in Europe as well as rising gasoline prices that can take its toll on car travel in US.
He explained that growth rate in revPar slowed down in third and fourth quarter for both Hyatt and its rival Marriott International, which also posted its quarterly results this week.
Hyatt said that in North America, fourth quarter revPAR gained 6.5% at full service hotels and was up by 5.5 percent on only selective hotel service which offered limited food and drink outlets. International revPAR rose 2.9%.
Hyatt’s net income stood at $52 million, which translates to 31 cents a share in the quarter, compared to $6 million, or 3 cents a share, a year ago. However, the latest quarter included a $28 million benefit gained from income taxes.
Analysts also expected to $1 billion compared with the actual rise of 8% to $990 million, according to Thomson Reuters.
MORE GROWTH EXPECTED
Marriott, which runs brands including Ritz-Carlton and Residence Inn, has forecasted revPAR growth in 2012 and is also confident about the growth business.
“When we went into 2011, the booking pace was up about 2 percent. Going into 2012, the booking pace is up 9 percent, so that’s a significant improvement,” Marriott spokesperson Laura Paugh said.
Meanwhile, Hyatt’s s shares have gained 0.8 percent or 33 cents, to $43.17 in New York Stock Exchange trading, while Marriott shares were slipped 7 cents to $34.66.