Hyatt Hotels Corporation 2010 Annual Report Hyatt Hotels Corporation 2010 Annual Report Hyatt Hotels Corporation 2010 Annual
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hyatthyatt hotelshotels corporationcorporation 20102010 annualannual reportreport `qYll`gl]dk[gjhgjYlagf*()(YffmYdj]hgjl ` qY ll ` gl] d k [g jh g jY l a g f* ( ) ( Yff m Ydj ] h g j l authentic experiences We are a global hospitality company with widely recognized leading brands and a tradition of innovation developed over our more than fi fty-year history. Our mission is to provide authentic hospitality by making a difference in the lives of the people we touch every day. We focus on this mission in pursuit of our goal of becoming the most preferred brand in each segment that we serve for our associates, guests, and owners. We pursue our mission and goal in an environment characterized by a set of core values that defi nes our culture. Thomas J. Pritzker Executive Chairman’s Letter to Shareholders Dear Fellow Shareholders: I want to take this opportunity to share my views on our Our strong capital base positions us to support our industry and discuss how those views inform our goals strategy and take informed risk in pursuit of creating and strategy at Hyatt. Let me start with the conclusion. long-term value through industry cycles. We have defined our goals and aligned our strategy for Our strategic focus on enhancing preference for our Hyatt around being the most preferred brand in each segment that we serve. We want to be preferred by our brands begins with driving preference among our associates, our guests and our hotel owners. We believe associates because our people are the key to our success. that if we are successful at meeting these goals we will We believe that we can be the most preferred brand in strengthen the value of our brands. We believe that each segment that we serve because of the excellence our path to creating long-term shareholder value is to of our people and because of the responsibility that we consistently and effectively execute against this strategy. place on the general managers and their teams to reflect their local markets while striving to deliver on the The hotel business is cyclical. Being able to respond brand promise to each and every guest. We do this with to cycles is an appropriate and necessary skill set in this confidence because we have superb general managers industry. Since the ultimate measurement of our success and senior leadership in our hotels. We do this with is long-term shareholder value, we continually strive to act, but not to overreact, to opportunities and challenges confidence because the culture of Hyatt continues to in our environment. Our actions will be taken while bind us together into what we call the Hyatt family. keeping an eye on the horizon and in a manner consistent In order to maintain our culture, we focus on managing with our goals, strategies and long-term orientation. so that we are able to staff new properties with lead- I believe that the Hyatt business model, which includes ers and associates who carry the Hyatt DNA. We must owning, managing and franchising hotels, provides maintain and enhance our culture if we are to be suc- us with the tools for sustainable and diverse earnings cessful over the long-term and that will remain an streams in the context of a cyclical industry. area of focus. 2 We believe that our people are the key to our success. In the years to come, I believe we will look back at these We believe that our growth needs to be consistent with markets and see the strength of what we mean by the our ability to develop associates who can serve our guests term harmonious growth. with the Hyatt touch. We believe that our growth needs On behalf of the Hyatt Hotels Corporation Board to be balanced and driven by our goals, strategies and of Directors I thank you, our shareholders, for your trust values. We have come to call this harmonious growth. in us. We are committed to earning your support every This is one way we at Hyatt intend to create sustainable day as we continue to delight our guests, nurture great long-term shareholder value. brands and reward our investors with the creation of In today’s world, attention has shifted to India, China long-term value. and other markets where there is a small base of existing Sincerely, hotel properties relative to the size of the economies and population base. This concept is not new to us. We have had hotels in these countries for close to 30 years. Having established a narrow foothold, we then focused on devel- oping teams of people. Many of these same people have Thomas J. Pritzker now represented Hyatt for decades in these countries and Executive Chairman of the Board have developed deep relationships with local owners and customers in order to better understand their needs and aspirations. From this base, we have gained knowledge of local conditions and developed associates who are able to create a consistent Hyatt experience for other associ- ates, guests and owners in new hotels as they are opened. 3 Mark S. Hoplamazian President and Chief Executive Officer’s Letter to Shareholders Dear Fellow Shareholders: Our passionate quest for enhancing preference for each Performance in Existing Properties of our brands, coupled with a commitment to building For the year ended December 31, 2010, we improved long-term value, informs all of our decisions. Throughout margins at our comparable owned hotels by 1.8 percent- 2010 we saw the benefits of that focus. age points, an achievement that was particularly mean- Adjusted EBITDA for Hyatt for 2010 increased by 17 ingful given that much of the top-line improvement percent – an increase realized as we enhanced our during the year stemmed from increases in occupancy. foundation for the future. We are pleased that earnings We increased productivity in most areas of the world increased substantially, but we are also mindful that room and across our brands. We also saw significant market rates, revenue and earnings levels remain well below the share increases at many hotels, including a very large levels achieved a few years ago, and in a number of mar- portion of our Select Service properties. Even as we kets we continue to rebuild occupancy back to prior levels delivered higher profit margins, we achieved higher as demand returns and as we expand market share. satisfaction scores among guests and meeting planners across our hotels, and an increase of almost 15 percent We have two primary avenues of earnings growth – in new member enrollment in our Gold Passport program. improvements in operating results from existing hotels that we own, manage and franchise; and the addition of We realized improvements in guest preference in new properties under each of our brands. Progress on large part by providing what we call authentic hospitality. both fronts depends on the talent, effort and focus of the And that starts with our people. From our more than teams who spend every day serving our guests and our 53 years in business as a hospitality company, we know hotel owners, responding to their needs, and imagining that great people who give of themselves in service ways – large and small – that we can serve them better. to others ensure great service and high levels of During the year we made significant progress. customer satisfaction. 4 Providing that level of hospitality consistently leads to From a brand perspective, we continued growing the An- sustained revenue progression and strong market share daz brand with the opening of properties in New York and performance, which in turn leads to superior fi nancial San Diego. Developer interest in this unique, vibrant brand results. That supports growth, as we build on the support has been strong, as evidenced by the 12* hotels and resorts of our hotel owners to invest in our brands. open or under development, including the Andaz Shang- hai that we expect to open in 2011. In addition, we opened We believe in the ability of our associates to make a mate- rial difference in the performance of our properties. The the Park Hyatt Aviara in Carlsbad, California, and plan to leadership of our talented general managers, who operate expand the Park Hyatt brand to more than 40 properties in with entrepreneurial confi dence and engagement, truly the coming years. sets us apart from other hospitality companies. We opened 31 hotels last year, nine in markets in which Strategic, Customer-Driven Expansion we did not have a presence. As of December 31, 2010, we had executed contracts for approximately 140 new hotels Our creative, responsive development team has established representing more than 32,000 rooms. Of these poten- real momentum for expansion of our presence around the tial new properties, approximately 70 percent are located world. In 2010 we made signifi cant progress on increas- outside of North America, representing planned entry ing our presence, recycling assets, and applying capital to into eight countries where Hyatt does not currently have a extend our brands where they are under-represented in key presence. This more than 15 percent increase in executed markets around the world. contracts over 2009 levels underscores the preference we In New York, one of the world’s most exciting destinations are generating among owners and developers as well as and a market critically important to our guests, we grew their confi dence in our understanding of and service to from one hotel to three, and expect to open three additional our guests and the customer segments we serve properties in Manhattan over the next several years.