Hyatt (H) Q2 EPS Falls 56 Revenue Up 6% | The Motley Fool

Hyatt Hotels (H -0.45%), a global hospitality group operating luxury, lifestyle, and all-inclusive hotels, released its earnings for Q2 2025 on August 7, 2025. The most significant news was better-than-expected adjusted diluted earnings per share (EPS) of $0.68 (non-GAAP) and revenue of $1.81 billion. Non-GAAP EPS outperformed analyst forecasts. However, compared to last year, adjusted earnings (non-GAAP) and net income (GAAP) declined, with net income (GAAP) dropping to a $3 million loss. The quarter showed continued strength in fee-based growth and global expansion, but headline profit metrics and select U.S. segments saw moderation.

Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q1 2025 earnings report.

The Business and Its Focus

Hyatt Hotels is a hospitality company that manages, franchises, owns, and develops a broad portfolio of properties across luxury, lifestyle, all-inclusive, and midscale segments. Its brands serve diverse markets around the world, from high-end travelers seeking five-star experiences to budget-focused guests looking for value.

The company’s strategic focus is on growing its asset-light, fee-based business model, expanding its global footprint, and deepening customer loyalty through its World of Hyatt loyalty program. Success depends on broad brand appeal, robust property development, a strong financial base, and delivering consistent guest experiences that encourage repeat bookings.

Second Quarter Developments

Gross fees—recurring revenues generated from franchising, management, and related fees—rose 9.5% to $301 million. This increase was driven by higher base management fees (up 13%), incentive management fees (up 15%), and contributions from acquisitions such as the Bahia Principe and Standard International transactions. Notably, these contributed $11 million, or 42% of the total fee growth. Franchise and other fees increased 4% compared to Q2 2024.

System-wide revenue per available room (RevPAR)—a key industry measure representing average revenue per room—grew 1.6% to $150.97. Growth was led by luxury hotels, with Park Hyatt and Andaz hotels seeing RevPAR increases of 9.0% and 7.2%, respectively. The all-inclusive segment, which includes resorts where guests pay one price for lodging, meals, and activities, also showed substantial strength. All-inclusive Net Package RevPAR increased 8.6%, with Europe up 22.5%. In contrast, U.S. select-service hotels recorded a RevPAR decline, highlighting softer demand in that subsegment.

Adjusted EBITDA, reflecting core profitability before interest, taxes, depreciation, and amortization, was $303 million—slightly below last year’s $307 million result for Q2 2024. However, after accounting for properties sold in 2024, this represents a 9.0% increase. Owned and leased hotel margin shrank by 170 basis points, indicating continued pressure on this segment’s profitability. Distribution operations, which handle third-party room and travel sales, maintained flat earnings year over year, with cost controls balancing out lower booking volumes.

The quarter included a major acquisition: Playa Hotels, an all-inclusive resort group, was acquired for $2.6 billion. Hyatt signed an agreement on June 30, 2025 to sell Playa’s owned real estate portfolio for $2.0 billion, with closing expected before the end of 2025. The proceeds are intended to repay the $1.7 billion term loan used for the acquisition, in line with Hyatt’s strategy to maintain an asset-light model while securing long-term management contracts. Integration and transaction costs related to Playa, totaling $82 million, were significant factors impacting net income.

Business Model, Portfolio, and Global Expansion

Hyatt’s asset-light approach, where the company focuses primarily on management and franchise fees rather than owning hotels outright, underpins its financial strategy. At quarter end, it operated 1,487 hotels and nearly 364,000 rooms worldwide. Net rooms grew 11.8%, including 6.5% organic growth (excluding acquisitions). The company opened 8,920 rooms, 2,600 of which came from the Playa acquisition.

Brand development remains active. Hyatt launched a new upscale brand, Unscripted by Hyatt, targeting flexible conversion opportunities for property owners. The company also opened new hotels in destinations such as Croatia and Greece, further demonstrating its push into new markets and customer segments. Its development pipeline stood at approximately 140,000 rooms, an increase of approximately 8% compared to Q2 2024. International performance outpaced domestic results, especially in Asia-Pacific (up 7.4% RevPAR), Middle East & Africa (up 14.0% RevPAR), and Europe (up 2.5% RevPAR), based on comparable system-wide hotels in constant dollars.

Loyalty and customer engagement continued to see momentum. The World of Hyatt program reached about 56 million members, with loyalty bookings accounting for an increasing share of room nights.

The company ended the quarter with $6.0 billion in total debt, reflecting Playa funding, and had liquidity of $2.4 billion. A remaining $822 million share repurchase authorization was left untouched. The company declared a quarterly dividend of $0.15 per share, unchanged from the previous period.

Looking Ahead: Management Guidance and Investor Watchpoints

Hyatt’s management expects comparable system-wide RevPAR growth of 1% to 3% year over year for FY2025 and net rooms growth excluding acquisitions of 6% to 7% for the full year. Net income (GAAP) is projected sharply lower, in a range of $135 million–$165 million excluding Playa, down considerably from FY2024’s $1,296 million, which included large one-time real estate gains. Adjusted EBITDA is forecast between $1.09 billion and $1.13 billion, representing a 7% to 11% year-over-year increase, adjusting for prior asset sales. Including Playa, adjusted EBITDA (non-GAAP) guidance rises to $1.16–$1.22 billion, but net income will remain depressed due to higher charges and integration costs from the deal.

Management signaled expectations for flat to 2% system-wide RevPAR growth for the balance of the year, consistent with trends seen in Q2 2025. Investors will want to monitor the integration and real estate recycling from Playa, ongoing margin trends in owned and leased properties, and the performance of U.S. select-service hotels where demand remains muted. Global pipeline growth, continued fee-based expansion, and potential changes to the loyalty business represent other key watchpoints. The company maintained its quarterly dividend at $0.15 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.