This was a big week for the brands with Marriott International, Hyatt Hotels, Hilton Worldwide, Starwood Hotels & Resorts Worldwide, and InterContinental Hotels Group reporting 2014 earnings and Starwood’s Frits van Paasschen stepping down from his position as president and CEO. Here’s a quick run through of the highlights.
Marriott International
Yesterday, Marriott reported record earnings driven largely by strong performance from its North American portfolio, and in particular its limited service brands, which saw 8 percent RevPAR growth last year. For Canada, Mexico, and the U.S., the company had system-wide RevPAR of 6.7 percent in the fourth quarter of 2014 and 7 percent for the full year. Based on this performance, Marriott reported $197 million in income out of $3.56 billion in revenue for the year, beating analysts’ expectations.
Globally, Marriott added over 46,000 rooms in 2014—including 10,000 rooms from its acquisition of South Africa’s Protea Hospitality Holdings, which completed last April—to bring its total footprint to 715,000 rooms across 79 countries. In this morning’s earnings call, Marriott President and CEO Arne Sorenson said, “We’re please with our acquisitions of AC Hotels, Protea, and Delta. Each one has provided us a new platform for growth.” Looking ahead, Marriott is calling for a 5 to 7 percent rise in RevPAR in 2015, and is targeting a goal of one million rooms worldwide before the end of the year. As of the end of last year, Marriott had 240,000 rooms in its pipeline, a number that doesn’t include Canada’s Delta Hotels and Resorts, which will add another 10,000 rooms when the deal is completed.
Hyatt Hotels
Yesterday, Hyatt reported a fourth-quarter profit of $47 million that was largely due to RevPAR gains and asset sales. Comparable system-wide RevPAR increased 3.1 percent in the fourth quarter. The company said fee income rose over 7 percent in the fourth quarter and 13 percent for the entire year. Hyatt’s 2014 profits were $182 million—up $32 million year over year—and include a $246 million gain from real estate sales.
“Looking ahead, we expect continued strength in most U.S. markets while international markets will continue to be challenged due to market-specific factors,” Hyatt CEO Mark Hoplamazian said in a statement. “Our pace of new openings and our executed contract base position us well to continue expanding our presence in markets where our guests are traveling.” At the end of 2014, Hyatt had had executed management or franchise contracts for approximately 250 hotels with approximately 55,000 rooms. It expects to open 50 hotels this year.
Hilton Worldwide
During yesterday’s earnings call, Hilton reported a 155 percent rise in fourth-quarter profits to $158 million, with revenue climbing 7 percent to $2.83 billion. The company exceeded expectations during the fourth quarter and full year for adjusted earnings before interest, taxes, depreciation and amortization as well as fee growth. For 2014, Hilton reported system-wide RevPAR growth of 7.1 percent.
“We continued to see strong and balanced growth in both transient and group demand,” Hilton president and CEO Chris Nassetta said during the earnings call. “This has provided the foundation for solid rate growth.” For this year, Hilton is projecting RevPAR growth between 5 to 7 percent.
Last year, Hilton opened 240 hotels and grew its system-wide room count by 36,000. At the end of 2014, the company’s complete pipeline included approximately 230,000 rooms at 1,351 hotels throughout 79 countries.
Starwood Hotels & Resorts Worldwide
On Tuesday, Starwood announced that Frits van Paasschen, president and CEO, was stepping down, and that Adam Aron, a Starwood director since 2006, would serve as interim CEO while the board searched for a permanent replacement. Van Paasschen led the company for seven years and was previously head of the Coors unit at Molson Coors Brewing, as well as Nike’s corporate VP and general manager for Europe, the Middle East, and Africa.
This came on the heels of Starwood’s earnings report last week of profits that fell below market estimates, particularly when it came to unit growth, which grew by only 7,406 rooms last year. At the time, the company cited the strengthening dollar as a factor in lowering revenue from outside the United States. Then, Starwood announced the spin of its timeshare business and teased the introduction of a soft brand.
During the earnings call on February 10, Starwood CFO Tom Mangas said, “We were disappointed with our net rooms growth in 2014 and we’re taking several actions to drive to our longer term target of 4 to 5 percent net rooms growth. We’re putting an incremental feet on the street and resource across functions to support higher levels of deal activity and frankly more complicated deal activity. The development community is looking for us to bring additional tools to help them get deals off the ground in forms of debt guarantees or operating guarantees and different forms of balance sheet participation that we generally have not done before.”
Van Paasschen is the second top executive to leave Starwood in the past year. Vasant Prabhu, who had been chief financial officer, resigned in April to take the same role at NBCUniversal Media before jumping to Visa earlier this month.
InterContinental Hotels Group
On Tuesday, InterContinental Hotels Group reported its strongest net system size growth since 2009—3.4 percent—increasing its operating profit on an underlying basis by 10 percent to $648 million. Global RevPAR jumped by 6.1 percent, led by 7.4 percent growth in the Americas. Full-year revenue declined 2 percent to $1.86 billion, but on an underlying basis it increased 6 percent to $1.67 billion.
To further its foothold in the lifestyle space, IHG acquired Kimpton Hotels & Restaurants for $430 million, adding 62 properties in 28 cities. “We expanded our brand portfolio and strengthened our position in boutique hotels, the fastest growing segment in the industry over last five years,” Chief Executive Officer Richard Solomons said in a statement.
IHG disposed of two landmark assets in 2014—InterContinental Mark Hopkins San Francisco and InterContinental New York Barclay—and accepted an offer for the InterContinental Paris-Le Grand hotel. The company also opened the first properties for its Even Hotels brand, while achieving growth milestones across its established brands, including opening its 400th Crowne Plaza, 200th Staybridge Suites, and 60th Hotel Indigo. Just last week, IHG’s first Hualuxe Hotel debuted in China.
“Looking into 2015, we face many macro-economic and geopolitical uncertainties but are confident that our strategy for high quality growth coupled with the momentum in the business positions us well for continued strong performance,” Solomons concluded.
