Attached files
| file | filename |
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| 8-K - FORM 8-K - Hyatt Hotels Corp | d477560d8k.htm |
| EX-99.1 - PRESS RELEASE - Hyatt Hotels Corp | d477560dex991.htm |
 Management Agreements for
four hotels in france
February 1, 2013
Exhibit 99.2 |
 Forward looking Statements
2
Forward-looking statements in this presentation, which are not
historical facts, are forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements include, among other things, statements
about our plans and strategies, market trends in France, anticipated renovations and
dates by which such renovations will be completed, market share trends,
expected funding under the performance guarantee and depreciation and amortization
expense or future events and involve known and unknown risks that are
difficult to predict. As a result, our actual results, performance or achievements may differ
materially from those expressed or implied by these forward-looking
statements. In some cases, you can identify forward-looking statements by the use of words such as
“may,” “could,” “expect,” “intend,”
“plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and
variations of these terms and similar expressions, or the negative of these
terms or similar expressions. Such forward-looking statements are necessarily based upon
estimates and assumptions that, while considered reasonable by us and our
management, are inherently uncertain. Factors that may cause actual results to differ
materially from current expectations include, among others, general economic
uncertainty in key global markets including Europe and a worsening of global economic
conditions or low levels of economic growth; levels of spending in business
and leisure segments as well as consumer confidence; declines in occupancy and average
daily rate; limited visibility with respect to short and medium-term
group bookings; our ability to successfully achieve certain levels of operating profit at hotels that
have performance guarantees with our third-party owners; the
impact of hotel renovations; the impact of rebranding efforts; our ability to successfully execute and
implement our organizational realignment and the costs associated with such
organizational realignment; our ability to successfully execute and implement our
common stock repurchase program; loss of key personnel, including as a
result of our organizational realignment; hostilities, including future terrorist attacks, or fear
of hostilities that affect travel; travel-related accidents; changes in
the tastes and preferences of our customers; relationships with associates and labor unions and
changes in labor law; the financial condition of, and our relationships
with, third-party property owners, franchisees and hospitality venture partners; if our third-
party owners franchisees or development partners are unable to access
the capital necessary to fund current operations or implement our plans for growth; risk
associated with potential acquisitions and dispositions and the introduction
of new brand concepts; changes in the competitive environment in our industry and the
markets where we operate; outcomes of legal proceedings; changes in federal,
state, local or foreign tax law; foreign exchange rate fluctuations or currency
restructurings; general volatility of the capital markets; our ability to
access the capital markets; and other risks discussed in the Company's filings with the U.S.
Securities and Exchange Commission, including our Annual Report on Form
10-K, which filings are available from the SEC. We caution you not to place undue
reliance on any forward-looking statements, which are made as of the
date of this presentation. We undertake no obligation to update publicly any of these forward-
looking statements to reflect actual results, new information or future
events, changes in assumptions or changes in other factors affecting forward-looking statements,
except to the extent required by applicable laws. If we update one or more
forward-looking statements, no inference should be drawn that we will make additional
updates with respect to those or other forward-looking statements.
|
 Overview
•
Hyatt
a
to re-brand four hotels in France as follows:
Current name:
To be re-branded as:
Concorde La Fayette
Hyatt Regency Paris Etoile
Hotel du Louvre
Andaz following renovation
Hotel Martinez
Grand Hyatt Cannes Hotel Martinez
Palais de la Mediterranee
Hyatt Regency Nice Palais de la Mediterranee
•
1,712 rooms after renovation
•
Long-term management agreements with renewal options
•
Iconic, well-known properties in high-barrier-to-entry
markets •
Hyatt to commence management services for hotels in 2Q13
•
Owner to complete a significant portfolio renovation by mid-year
2016 3
a
Hyatt refers to Hyatt Hotels Corporation or one of its affiliates
|
 High Demand Markets
4
Paris:
•
One
of
the
most
successful
and
largest
hotel
markets
in
Europe
with
high
barriers
to
entry
a
•
36.9M hotel nights, 15.6M arrivals in 2011
b
•
81,139 Rooms / 1,549 hotels
b
•
Total market RevPAR + 4.7% YTD November 2012
b
•
Attracts a large number of meetings, congresses and exhibitions and has
the largest provision
of
covered
exhibition
space
in
Europe
(600,000+
square meters)
a
•
Approximately
40%
of
the
350
international
trade
fairs
organized in
France
each
year
are
held in the capital
a
a
Source: Paris Chamber of Commerce
b
Source: MKG Hospitality, Hotel Industry Trends Report Nov 2012
|
 High Demand Markets
Cannes:
•
France’s 2
nd
most important city for business, tourism and a strong group
destination •
2M visitors annually
a
•
120 hotels / 7,500 rooms in 2011
a
•
Total market RevPAR + 5.9% YTD November 2012
b
5
a
Source: Cannes Convention Bureau
b
Source: MKG Hospitality, Hotel Industry Trends Report Nov 2012
c
Source: Nice Cote Azur –
Convention and Visitors Bureau
Nice:
Fifth largest city in France with nearly 4M visitors annually
c
1/3
of
French
Riviera’s
hotel
accommodations
with
nearly
200
hotels
and
10,000
rooms
c
Total
market
RevPAR
+1.4%
YTD
November
2012
b
•
•
• |
 Strong Portfolio Attributes
•
Diverse earnings mix
•
44% Group
•
56% Transient
•
Opportunity to increase inbound business
Current Mix:
•
69% Europe
•
12% U.S.
•
8% Rest of World excluding Europe
•
7% Middle East
•
Strong current market share, expected to grow
•
Owner to complete a significant portfolio renovation by mid-year
2016 6 |
 Expanding our Footprint In France
7
Additions to the portfolio:
Paris
Hyatt Regency Paris Etoile (950 rooms)
Hotel du Louvre (177 rooms, Andaz following
renovation)
Cannes
Grand Hyatt Cannes Hotel Martinez (409
rooms)
Nice
Hyatt Regency Nice Palais de la Mediterranee
(188 rooms)
Source: Bing maps
Existing portfolio:
Paris
Park Hyatt Paris Vendome (158 rooms)
Hyatt Paris Madeleine (86 rooms)
Hyatt Regency Paris Charles De Gaulle (388
rooms)
•
•
•
•
•
•
• |
 8
950 rooms
37,000 square feet of meeting space
Strong group business as proximate to Palais des
Congres, the largest meeting venue in Europe
Tallest hotel in Central Paris (35 stories)
Located between historical city center and
business area of La Defense
2012 RevPAR increased 8.1%
409 rooms
Nearly 27,000 square feet of conference space; one of
the largest conference facilities in Cannes
1929 art deco building
Located on French Riviera
One of only three “palace”
hotels in Cannes
2012 RevPAR increased 3.2%
188 rooms
20,000 square feet of meeting space
Directly facing the sea, the hotel stands on the
world renowned Promenade des Anglais
Highly visible due to its prominent historic Art-
Deco facade
2012 RevPAR increased 10.6%
177 rooms
Strong demand from both corporate and leisure
guests
Built in 1855 as Paris’s first luxury hotel
1
st
Arrondissement location opposite Louvre
Museum
2012 RevPAR increased 9.2%
HOTEL DU LOUVRE (ANDAZ FOLLOWING
RENOVATION)
HYATT REGENCY PARIS ETOILE
HYATT REGENCY NICE PALAIS DE LA
MEDITERRANEE
GRAND HYATT CANNES HOTEL MARTINEZ
Portfolio detail |
 Management Agreement and FEE Terms
•
Long-term management agreements with renewal options
•
Fixed base fee percentage
•
First 12 months: approximately €5M
•
Expected to increase over time
•
Performance guarantee covers first seven years of management
agreements •
No annual guarantee cap, maximum cumulative cap of €377M
•
•
If profits are above annual guarantee level, excess is retained by Hyatt as
incentive fee •
If
profits
are
below
annual
guarantee
level,
Hyatt
does
not
earn
incentive
fee
and
Hyatt
funds up to annual guarantee level
•
From and after the seventh year, annual incentive fee equals fixed
percentage above owner return threshold
•
Expected to be approximately €1.5M per year from and after the seventh
year and increase over time
9
•
Hyatt expects to earn between €10M and €15M in total management
fees over the first twelve months Incentive management fee:
•
During the first seven years, annual incentive fee expected to be between
€0M and €15M as follows: |
 Performance Guarantee accounting
Liability of approximately €90M to be recorded upon inception of the
performance guarantee; represents the fair value of the performance
guarantee liability with an offsetting intangible asset
The performance guarantee liability will be amortized as income over the
term of the guarantee (recorded as other income)
The intangible asset will be amortized over the initial term of the
management agreements (recorded as amortization expense)
Quarterly, we will assess the likelihood of payment under the guarantee and
to the extent a payment is probable within the year, we will record a
separate liability and a corresponding expense (recorded
as other loss)
Our current expectation is that the likelihood of a payment under the
performance guarantee in 2013 or 2014 is low
Any income or loss related to the liabilities or intangible asset will not
impact Adjusted EBITDA 10
•
•
•
•
•
• |
 Summary
•
Agreements are consistent with strategy to increase long-term brand
presence in key gateway locations
•
Unique opportunity given high-barrier-to-entry markets
•
Iconic, well-known, well-performing hotels with diverse customer
base •
Ability to immediately brand and manage under Hyatt brands
•
Owner has committed capital to renovate properties
•
Attractive economics, particularly post re-branding and renovation
•
Expected to have relatively low levels of Hyatt capital outlay
11 |
 12 |