Hyatt Hotels Corp., the chain controlled by the Pritzker family, fell more than 3 percent in New York trading after reporting a decline in earnings before some items because of renovation costs.
First-quarter earnings before interest, taxes, depreciation and amortization, excluding items such as gains on sales of real estate and discontinued operations, fell to $109 million from $112 million the year earlier, the Chicago-based company said today in a statement. That trailed the estimates of analysts including Patrick Scholes of FBR Capital Markets Corp., who predicted an increase to $121 million.
“The Ebitda miss was primarily from lower-than-expected operating profit from owned hotels as renovation disruption was greater than most anticipated,” Scholes, based in Arlington, Virginia, wrote in a note to clients today.
Hyatt is spending as much as $400 million to upgrade its properties. The company said on Feb. 17 that displacement from renovations will hurt results through the third quarter of this year. Interruptions have been slightly higher than previously expected, Chief Financial Officer Harmit Singh said today during a conference call with investors.
“We want to finish renovations as soon as possible,” President and Chief Executive Officer Mark Hoplamazian said during the call. The hotelier expects to start seeing “gradually higher results” in the fourth quarter, he said.
Hyatt fell $1.56, or 3.5 percent, to $42.58 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has lost 7 percent this year.
First-quarter net income climbed to $10 million, or 6 cents a share, from $5 million, or 3 cents, a year earlier. The hotelier was expected to earn 5 cents, the average estimate of nine analysts in a Bloomberg survey.
Revenue increased to $875 million from $841 million a year earlier. Revenue per available room, or revpar, for hotels owned or leased for at least a year climbed 8.1 percent at full-service hotels in North America and 11 percent overseas.
“Their level of growth will be lower than at some other companies because of the renovations that are under way,” David Loeb, an analyst at Milwaukee-based Robert W. Baird & Co. said in an interview before the earnings were released. “It’s a good long-term strategy but will hold them back a bit in the short term.”