Travel demand 'cooling off' due to COVID is 'short-term phenomenon': Hyatt CEO
Mark Hoplamazian also discussed Hyatt's acquisition of Apple Leisure Group on 'Mornings with Maria'
Hyatt CEO on travel 'cooling off' amid COVID, back to school
Hyatt CEO and President Mark Hoplamazian discusses leisure travel amid the pandemic, business travelers and the hotel acquiring Apple Leisure Group.
President and CEO of Hyatt Hotels Corporation Mark Hoplamazian argued Thursday that travel demand’s current cool down is a "short-term phenomenon."
Hoplamazian pointed to data from the Transportation Security Administration, which revealed that just over 1.7 million people passed through security checkpoints at airports nationwide on Tuesday amid concerns over the COVID-19 Delta variant. The number marked the "lowest checkpoint volume" in almost two months, TSA spokesperson Lisa Farbstein said.
The Hyatt CEO told "Mornings with Maria" he believes the drop in travel is temporary due to "different trends and seasonality issues hitting us at the same time."
Hoplamazian explained that "the leisure travel momentum is going to start to cool down" because children are going back to school soon.
He said another factor for the drop in "bookings in the very near-term" is a result of concerns over the Delta variant.
Hoplamazian noted that "the biggest market in which that has been true is China, where the country has really implemented significant and very strict restrictions on travel." He went on to say that as a result "the booking pace in China has come down dramatically."
While Hoplamazian acknowledged that "leisure travel is definitely going to come down," he stressed "it’s not going to go away."
The CEO noted that families were still traveling in the spring and working from his hotels, pointing to a new trend developed during the pandemic where travel was repurposed for remote work.
"I think we might see some of that this year although the big difference is that kids are back in school across the country and I think that that will keep people closer to home," Hoplamazian told host Maria Bartiromo.
He added he expects the new coronavirus restrictions in certain cities like New York City amid a surge in Delta cases could cause a short-term decrease in business travel.
Hoplamazian pointed out that "the segment that seems to be holding up into the fall and into the fourth quarter is meetings."
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He noted that his hotels actually had increased bookings for meetings into the remainder of the year, which he said suggests "people are anticipating that the restrictions are going to start to alleviate and will allow people to get back together for business purposes."
Hoplamazian observed that over the past 18 months industry leaders learned "that the most important thing is the ability to pivot and adapt on a real-time basis." He said his company now has "a playbook" to respond to pandemics.
HOTEL GUESTS BOOKING ONLY DAYS IN ADVANCE, HYATT SAYS
He then stressed "the disruption that we are seeing right now is going to be short-lived," noting that he doesn’t believe the Delta variant will impact travel as much by the end of the year.
"The key issue is you’ve got to stay nimble," he said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| H | HYATT HOTELS CORP. | 157.94 | +1.83 | +1.17% |
| KKR | KKR & CO. | 162.87 | +2.84 | +1.77% |
Hoplamazian provided his insight into the travel industry four days after Hyatt Hotels announced it had entered a deal to buy resort company Apple Leisure Group from its private-equity owner KKR & Co and travel-and-leisure specialist KSL Capital Partners for $2.7 billion in cash, Reuters reported.
Hoplamazian told Bartiromo that the deal "will double our global footprint of resorts and increase our representation in Europe by 60%."
He said that the $2.7 billion acquisition, "speaks to two things," which include the "strength" of Hyatt’s balance sheet "and the asset base that we have."
"We own a lot of hotels that we are now planning to sell," he continued.
Earlier this month, Hyatt Hotels Corporation reported a net loss of $9 million, or $0.08 per diluted share, in the second quarter of 2021, compared to net loss of $236 million, or $2.33 per diluted share, in 2020.
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In the first quarter, the hotel operator reported a bigger loss as people stayed at home due to the COVID-19 pandemic. The company said business demand gained momentum in that period, although at a more modest pace than leisure demand, Reuters reported.
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FOX Business’ Daniella Genovese contributed to this report.