Hyatt says Cancun demand cooled in Q3
Hyatt Hotels Corp. CEO Mark Hoplamazian, speaking on a Thursday earnings call, said the company’s Apple Leisure Group (ALG) arm saw more “temperate” Cancun demand in Q3, as the destination reverted to “more regular seasonal patterns.”
According to Hoplamazian, Cancun was a “go-to market” for much of the pandemic but travelers are now flocking to destinations that were less accessible during Covid, including Europe. He highlighted a tough comparison to the third quarter of last year, when Cancun was in the midst of “unusually high demand.”
“It’s not surprising that we [have seen] a broadening of destinations,” said Hoplamazian, adding that the ALG Vacations tour operator business has seen its departures to Europe increase over 100% year-over-year.
“Europe is not a particularly large base of business for them,” Hoplamazian pointed out. “But it’s notable that it’s doubled.”
Bright spots in Cancun numbers
Still, Hoplamazian pointed to several bright spots for ALG’s Cancun business, citing “tremendously strong” demand ahead of the holidays, with booking pace for ALG luxury all-inclusive resorts in Cancun for the festive period up 8%, and booking pace for the first quarter of 2024 up 12%.
According to Hoplamazian, Cancun — and the Caribbean in general — remains “a remarkable destination. The quality level of the experiences continues to rise, thanks in large part to what we’re doing with our luxury and five-star properties. The bar has gone up a lot,” he said.
Hyatt’s Inclusive Collection of luxury all-inclusives — the bulk of which joined Hyatt’s fold via the company’s 2021 acquisition of ALG and AMResorts — has nearly 30 properties within the greater Cancun market, including in nearby Playa del Carmen.
Looking at luxury more broadly, Hoplamazian reported continued strength, with Hyatt’s ADR levels within its luxury segment running about 25% to 26% above 2019’s threshold.
Thank you, travel advisors
He also credited Hyatt’s relationships with travel advisors with helping to bolster the company’s steady high-end growth.
“One of the dynamics is that we have continued to pay special attention to our travel advisors,” he said, adding that the company is relying on them in its luxury division “to make sure that we have real focus on the very highest-rated guests.”
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Other highlights for the quarter included sustained global leisure demand, with Hoplamazian telling analysts that “rumors of the decline of leisure have been greatly exaggerated,” as well as robust group and business transient demand. Hyatt reported a leisure revenue increase of 4% over an “exceptionally strong” Q3 last year, while group revenue was up 10% and business transient revenue grew 19%.
Hyatt’s systemwide RevPAR increased 8.9% for the quarter, reaching $145.40, while occupancy rose 4.2 percentage points, to nearly 72%. Systemwide third-quarter ADR grew 2.6%, to just over $202.
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For the third quarter, Hyatt posted net income of $68 million, up from $28 million in the second quarter of 2022. Total revenue for the quarter was $1.6 billion, up from $1.5 billion a year earlier.
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