Hyatt Hotels Corporation (NYSE: H) is a leader in the global hospitality industry. The Chicago-based company owns, operates, develops, and franchises a vast fleet of branded hotels, in addition to resorts and residential ownership properties. Our team researched Hyatt’s quarterly earnings reports, income statements, balance sheets, cash flow statements and trading information. We specifically looked at Hyatt’s four most recent quarters:
We acquired the data from Nasdaq.com and Hyatt’s quarterly reports published on its Investor Relations page. Nasdaq.com had the most comprehensive data, with the income statement, balance sheets, and cash flow statements consolidated into one chart module. We found additional market data at MarketWatch.com
To form the basis of analysis, we input the data into the Excel spreadsheet, with the numbers representing values in 100’s, in order to produce the various financial ratios. The spreadsheet is included as an attached file. The following is an analysis of Hyatt’s main financial indicators, compared to its major competitor Marriot International Inc.
The spreadsheet reveals a compelling current ratio for Hyatt. At the end of its most recent quarter in September 2015, Hyatt’s current ratio was 1.23. The current ratio pertains to the liquidity of the company, or the ability of a company to pay for short-term expenses. Essentially the ratio divides the total current assets by the total current liabilities. Quarter-to-quarter since Q4 2014, Hyatt has shown a downward trend in its current ratio. Yet despite this decline over the past four quarters, Hyatt’s Q3 2015 current ratio of 1.23 put the company in a strong position to pay for its short-term obligations. According to Marketwatch.com, Hyatt’s ratio is now 2.34, an improvement from Q3 2015. The means Hyatt will have enough cash to maintain a steady operation, if not growth, in the next forthcoming quarters. Any ratio that dips below “1” indicates that accompany is a poor financial shape.
Hyatt’s quick ratio and cash ratio also saw a slight decline in the past four quarters. As of September 2015, Hyatt’s quick ratio was 1.22, down from 2.32 in Q4 2014. Its cash ratio was 0.64, down from 1.43 in Q4 2014. The ratios show that Hyatt is battling expenses and liabilities but has enough cash on hand. Data as of January 27, 2016 from Marketwatch.com shows Hyatt’s quick ratio has increased to 2.32, with the cash ratio at 1. 68. That suggests that the company is realizing efficiencies in its operation, thereby improving liquidity.
Analyzing liquidity ratios is key when looking at the hotel and hospitality industry at large. Due to the seasonal nature of the hotel business, companies must be able to cover massive liabilities in the form of salaries, wages, and equipment, especially at peak times. In turn, liquidity is imperative and can effectively indicate a hotel’s overall health. Gross and net profit margins are also key indicators of the industry overall. Comparing a company’s quarterly margins with the average industry margins will provide a strong assessment of the company’s operation, (Tarver, 2015). Hyatt’s major competitor, Marriot International Inc. (NYSE: MAR), has much tighter liquidity to work with. Marriot’s current and quick ratio is .63, while its cash ratio is 0.03. The hospitality behemoth has just enough short-term cash to get by. Marriot is definitely spending more capital than the Hyatt, which is eating into its net margin. Marriot’s net margin is currently 5.46, compared to Hyatt’s net margin of 7.79.
- “Hyatt Hotels Corp.” (2016). Retrieved January 27, 2016 from: http://www.marketwatch.com/investing/stock/h/profile
- “H Company Financials.” (2016). Retrieved January 27, 2016 from: http://www.nasdaq.com/symbol/h/financials?query=balance-sheet&data=quarterly
- “Hyatt Investor Relations: Quarterly Earnings.” Retrieved January 27, 2016 from: http://investors.hyatt.com/investor-relations/financial-reporting/quarterly-earnings/default.aspx
- “Marriot International Inc.” (2016). Retrieved January 27, 2016 from:
- Tarver, Evan. “Key financial ratios to analyze the hospitality industry.” (2015). Retrieved January 27, 2016 from: http://www.investopedia.com/articles/active-trading/082615/key-financial-ratios-analyze-hospitality-industry.asp