High-end hotel operator Hyatt (NYSE:H) today posted financial results that included improving profitability and near-record room occupancy levels. But foreign currency swings and capital spending pinched the top and bottom lines: Revenue fell slightly while net income dropped to $41 million from last year's $72 million result.

Here's a big-picture look at how the results compare to analysts' targets:

Revenue $1.14 billion $1.11 billion
Profit $0.46 per share $0.28 per share

*Expected is the average forecast of the 18 analysts who cover the stock. Source: Yahoo! Finance and Hyatt's financial filing.

U.S. strength, overseas weakness
Revenue per available room, or RevPAR, rose by a solid 6% after excluding the negative impact of foreign currency swings. That's a slowdown from the first quarter's 7% improvement, but it still shows that Hyatt is at record occupancy rates and enjoys good pricing power. RevPAR for the full 2014 fiscal year was 5% and is running at a 6% pace through the first half of 2015, so Hyatt is still in accelerating growth mode. 

Image source: Hyatt.

The United States business, by far Hyatt's biggest, booked an 8% RevPAR gain, equal to the prior quarter's result. But international sales weren't as strong. Hyatt's Asia-Pacific region posted just 2% RevPAR growth on slightly lower room prices. Similarly, the Europe, Africa, and Middle East region didn't manage any occupancy improvement even as prices dropped. 

Still, management is optimistic that the overseas business will improve over time. "Internationally, despite varied economic conditions, we believe that our brands will continue to resonate with owners and guests over the long-term," said CEO Mark Hoplamazian. 

Profitability and outlook
Profitability improved nicely as Hyatt's hotels serviced more guests. Higher traffic doesn't just raise RevPAR -- it also boosts ancillary businesses like food and beverage sales. And tighter demand allows Hyatt to raise room rates, which contributes directly to profits. All told, operating margin grew by more than a percentage point this quarter to reach 27.7% of sales.

H Gross Profit Margin (TTM) Chart

Trailing-12- month profit margin. H Gross Profit Margin (TTM) data by YCharts.

Looking ahead, the rest of the year's results will depend mostly on Hyatt's success at capturing growth in its U.S. business. An upswing in lodging demand amid an improving economy will help that cause. "We expect operating performance at our hotels in the United States to remain strong from continued economic growth and strong group trends," Hoplamazian said. 

Hyatt also hopes to get a boost in the years ahead from an aggressive expansion strategy. Management is on track to open 50 hotels this year, for a 20% increase in its footprint. Meanwhile, competitors aren't moving to add supply nearly as quickly. That pause presents an opportunity that Hyatt hopes to seize by investing in growth in key markets around the world.

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