The hotel industry has been among the hardest hit by COVID-19 as public events and sports activities have been canceled, most travel has been banned into the U.S. from Europe, corporations have curtailed business travel, and people have elected not to travel for fears of contracting the disease.
As the novel coronavirus outbreak, now called a pandemic by the World Health Organization, has been spreading around the world, its impact on our lives, communities, and the economy has been significant -- and very fluid.
The restrictions and impacts are changing daily, and with no sense of how long it will last, it has been difficult for businesses to assess the financial impact -- particularly hotels, which rely on travel.
That uncertainty caused Hyatt Hotels (NYSE:H) to withdraw its 2020 guidance last week, as Mark Hoplamazian, president and chief executive officer at Hyatt, said in a statement:
This is an evolving situation, and our ability to assess the financial impact of COVID-19 on our business continues to be limited due to quickly changing circumstances and uncertain consumer demand for travel. The 2020 outlook we provided with our fourth quarter earnings announcement was clearly stated as our base case excluding the impact of COVID-19. Since then, we have continued to monitor the situation, and while we remain unable at this time to quantify the full-year impact on our financial results, we believe it is appropriate to withdraw our previously announced 2020 outlook and earnings sensitivity based on Greater China RevPAR.
As the outbreak has spread beyond China, added Hoplamazian, there has been an increase in corporate travel restrictions, fewer transient bookings, and more group cancellations. He said the company will provide more information on its first-quarter fiscal 2020 earnings call in early May.
In the original guidance, released on Feb. 19 along with the fourth-quarter earnings report, adjusted EBITDA was expected to be $760 million to $780 million -- up from $754 million in 2019.
RevPAR -- revenue per available room -- was expected to be in the range of negative 0.5% to 1.5% in 2020. In 2019, it increased by 0.7%.
Hyatt's stock price was up 32.7% in 2019, but it has lost all of that -- and more -- so far this year. Year to date, the stock price is down by about 38%.
Hilton and Xenia follow suit
Hyatt has taken some steps to provide relief for travelers and extend goodwill for those who've had to cancel bookings. Guests who booked a room with a nonrefundable rate before March 8 will get 10,000 World of Hyatt loyalty points if they cancel. The offer applies to travel booked through June through Hyatt, not third-party providers. Also, guests who have booked hotels in China, Hong Kong, Macau, Taiwan, South Korea, Japan, and Italy through March 31 will have their cancellation fees waived.
Hyatt is not the only hotel company to pull its 2020 guidance. Xenia Hotels and Resorts did the same on March 11, citing a "significant rise in cancellations across our portfolio." Hilton Worldwide Holdings also pulled its 2020 guidance on March 10, stating that the negative impact will be greater than expected.