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On August 16, 2024, Hyatt Hotels Corporation (the "Company") announced that an affiliate of the Company has completed the sale of the 1,641-room Hyatt Regency Orlando and adjacent 45 acres of land to affiliates of RIDA Development Corporation and an Ares Management Real Estate fund (together, the "Purchasers") for approximately $1.07 billion, while retaining a long-term management agreement under the Hyatt Regency brand (the "Sale Transaction"). In connection with the Sale Transaction, the Company retained $265 million of non-controlling preferred equity and provided an additional $50 million of seller financing for the adjacent 45-acre land parcel. In addition, the Company has entered into a development agreement with Purchasers for a new Grand Hyatt hotel on the 45 acres of land adjacent to Hyatt Regency Orlando which is expected to have approximately 2,500 rooms and be developed in multiple phases. The full text of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
As a result of the completion of this Sale Transaction, the Company has exceeded its expanded $2 billion asset-disposition commitment announced in 2021, and the Company has now realized $2.6 billion of gross proceeds, net of acquisitions, at a 13.3x multiple over the three-year period. The Company expects to exceed 80% asset-light earnings mix in 2025.
2024 Updated Outlook
As a result of the Sale Transaction, the Company is providing the following updated outlook for the 2024 fiscal year. Full year 2024 outlook for Adjusted EBITDA remains in line with the outlook provided on August 6, 2024 adjusted for a $35 million reduction attributed to the Sale Transaction. Free Cash Flow remains in line with the outlook provided on August 6, 2024 adjusted for the $35 million reduction to Adjusted EBITDA and $135 million of cash tax payments related to the Sale Transaction. Capital Returns to Shareholders has increased $400 million compared to the outlook provided on August 6, 2024.
| Full Year 2024 vs. 2023 | ||||
| System-Wide Hotels RevPAR1 | 3.0% to 4.0% | |||
| Net Rooms Growth | 5.5% to 6.0% | |||
| (in millions) | Full Year 2024 | |||
| Net Income | $1,425 - $1,495 | |||
| Gross Fees | $1,085 - $1,115 | |||
| Adjusted G&A Expenses2 | $425 - $435 | |||
| Adjusted EBITDA2 | $1,100 - $1,140 | |||
| Capital Expenditures | Approx. $170 | |||
| Free Cash Flow2 | $390 - $440 | |||
| Capital Returns to Shareholders3 | Approx. $1,250 | |||
| 1 | RevPAR is based on constant currency whereby previous periods are translated based on the current period exchange rate. RevPAR percentage for 2024 vs. 2023 is based on comparable hotels. |
| 2 | Refer to the schedule attached as Exhibit 99.2 for a reconciliation of estimated Net Income attributable to Hyatt Hotels Corporation to Adjusted EBITDA, G&A expenses to Adjusted G&A expenses, and net cash provided by operating activities to Free Cash Flow. During the three months ended June 30, 2024, the Company revised its definition of Adjusted EBITDA to exclude transaction and integration costs and recast prior-period results to provide comparability. Refer to the Company's Earnings Release dated August 6, 2024 for additional detail. |
| 3 | The Company expects to return capital to shareholders through a combination of cash dividends on its common stock and share repurchases. |
No disposition or acquisition activity beyond what has been completed as of the date of this Form 8-K has been included in the 2024 updated outlook. The Company's 2024 updated outlook is based on a number of assumptions that are subject to change and many of which are outside the control of the Company. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results.
