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HHC

Hyatt Hotels Corporation “ HCC” (NYSE: H ) Incorporating additional information Meghan Shevlin March 31, 2014. HHC. Hyatt: global hospitality company engaged in management, franchising, ownership and development of Hyatt-branded hotels, resorts, residences

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HHC

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  1. Hyatt Hotels Corporation“HCC” (NYSE: H)Incorporating additional information Meghan ShevlinMarch 31, 2014

  2. HHC • Hyatt: global hospitality company engaged in management, franchising, ownership and development of Hyatt-branded hotels, resorts, residences • Hotel industry still suffering from the recession • 61% Revenues from Room sales • Industry growth of 3.3% expected through 2018 • Trading at $54.84 as of 3/23/2014

  3. Industry Comparables • Highly competitive industry with 21M rooms available • Hyatt owns over 500 properties (147,388 rooms) in 42 countries vs HOT & MAR (>340,000) • H NEA ($5,228) vs. MAR ($1,434) • H Profit Margin (8%) vs. MAR (25%) HOT (18%) IHG (18%) may explain H’s negative RI • NI H ($207M) vs. MAR ($626M)

  4. Explains high NEA • Industry competitors franchise approximately 80%

  5. Deferred tax assets

  6. Property, Plant & Equipment • May help to forecast future PPE • H plans to expand to under-penetrated markets where H already has a presence • Increase focus on franchising • Growth will slow down • Helps NEA

  7. Goodwill • Adverse change to their fair value estimates could result in an impairment charge, which may potentially be material to earnings • Goodwill by brand would have been informative

  8. Intangibles, net

  9. Other long-term liabilities

  10. Debt • Shows sources of funds from debt holders • No significant difference from competitors in the industry

  11. Employee Benefit Plans • Underfunded status recognized in Accumulated other comprehensive loss

  12. Revenues • NYC, France, Mexico, China and India • Helpful in determining growth

  13. S,G, & A • Increase in SGA was largely due to increases in professional fees and payroll • Rabbi trusts defer the taxability to the person or entity receiving payments (deferred compensation plans) • $4 million from “Uncontrolled management costs”

  14. Income Tax Rate • Ideal outcome: tax rate as if entity had no financial expense (all equity) • Adjust tax rate to 36.2%

  15. Other Considerations • Revenue Per Available Room (RevPAR) • ADR*Occupancy % • Evaluate hotel performance on regional and segment basis • Seek trend information on room revenue • No comprehensive comparison • More detailed reports of what is included in S, G & A will help determine where H can improve

  16. Conclusion • Expanding financials will influence forecasts for the future • Most of H’s PPE is from buildings • H expects to franchise more in the future, this number shouldn’t increase at 6% growth rate

  17. Questions?

  18. Sources • Hyatt Hotel Corporation Annual Report 2012 • Hyatt Hotel Corporation Investor Fact Book 2012 • Valuation for Financial and Accounting Professionals: A Guide to Valuation and Financial Statement Analysis, Easton, Sommers • www.nasdaq.com/symbol/h • www.yahoo.com

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