Hyatt’s Annual Report: 5 Things We Learned

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Hyatt’s annual 10-K provides a handful of notable details, including the final prices it paid for Mr & Mrs Smith and for Dream Hotels.

Hyatt is one of the world’s fastest-growing hotel groups, and we found a handful of notable details in its annual 10-K filing.

1. Hyatt paid a bit more for Mr & Mrs Smith than previously publicized.

In April 2023, Hyatt announced it would buy the boutique hotel booking site Mr and Mrs Smith for £53 million — or about $66 million based on exchange rates at the time.

The 10-K reveals Hyatt paid a bit more in the end, namely, cash of £58 million (about $72 million using exchange rates at the time). It attributed the change to “customary adjustments” to things such as “net working capital” and “value accrual.”

Separately, Hyatt revealed that it paid $5 million in legal and vetting costs to close the deal.

The 10-K also outlined the profit margins of Mr and Mrs Smith. Between June 2 and the end of the year, the site generated $2 million of net income on $15 million in total revenues.

2. Hyatt finalized the price of its Dream Hotels acquisition.

In November 2022, Hyatt announced its plan to buy Dream Hotels for $125 million in cash. It acquired brand rights — plus management contracts for a dozen hotels. It also retained an option to spend an unspecified additional amount for other assets.

The latest 10-K shows Hyatt paid an additional $107 million for signed long-term management agreements for planned hotels.

The filing also suggests how profitable Dream Hotels is. Between when the deal closed on February 2, 2023, and year-end, the dozen Dream Hotels produced $4 million in net income off of $7 million in fee revenue.

Hyatt paid $7 million in fees to close the acquisition.

3. Hyatt expects to sell more assets this year.

In 2021, Hyatt said it would target $2 billion in gross proceeds from selling real estate by the end of 2024.

The company has realized $961 million of those planned proceeds. For example, on February 9, 2024, it sold the Hyatt Regency Aruba Resort Spa and Casino for $240 million, including $41 million of seller financing. Hyatt now has a long-term management agreement for the property.

Hyatt said it’s marketing another asset for sale and is “engaged in off-market discussions for two other assets.” The sales fit in with the company’s goal of becoming more “asset-light.”

4. Hyatt employs fewer workers than pre-pandemic.

As of December 2018, Hyatt managed 206,000 workers — of which it directly employed 51,000.

In the intervening five years, it has increased its portfolio from 580 to 650 hotels.

Yet its latest 10-K says it only manages 189,000 people now — of which it directly employs 50,000.

In short, it now has a lower staff-to-guest ratio, on average — though it has also shifted its mix of properties to include more hotels that don’t provide full service.

5. Hyatt warned investors about AI risks for the first time.

Hyatt’s latest 10-K is its first to include language that acknowledges risks for its use of artificial intelligence (AI).

It noted that using AI “creates opportunities for the potential loss or misuse of personal data.” That, in turn, “may result in significantly increased business and security costs, a damaged reputation, administrative penalties, or costs related to defending legal claims.”

In light of Air Canada being asked to refund a passenger who said he got bad advice from a chatbot on the airline’s website, it’s notable that Hyatt is now warning that “the content, analyses, or recommendations that AI programs assist in producing are or are alleged to be deficient, misleading, inaccurate, or biased, our business, financial condition, and results of operations and our reputation may be adversely affected.”

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more hotels and short-term rental financial sector performance.

Read the full methodology behind the Skift Travel 200.

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