Investor Agenda

Checking in on Hyatt's Business

Corporate spending has so far been absent in the recovery. While that has taken a toll on the travel and leisure business, it hasn't stopped Hyatt Hotels from expanding its presence. This week, it added to its portfolio of more than 415 Hyatt branded properties worldwide, by introducing the Andaz Wall Street.

Behind the Andaz Brand

This luxury boutique hotel in downtown Manhattan is just Hyatt's second hotel in New York City. We were lucky enough to be invited to their soft launch this week, with Maria Bartiromo sitting down for an exclusive interview with Hyatt's Executive Chairman Tom Pritzker and its President & CEO Mark Hoplamazian. This is the third hotel in the Andaz collection, with a second one expected to open on 5th Avenue later this year.

In his interactions with guests and developers, Hoplamazian said there was "a broad demographic" of people who wanted to have a "stylish, but not overbearing" experience. Andaz Wall Street was a reflection of that, a 253-room hotel with simple sophistication.

Unlike its competitors, Hyatt has a great capital position. According to FBR Capital Markets, it had a total debt of $857 million, cash of $1.3 billion and no significant debt maturities through 2012 at the end of Q3. Hoplamazian said the company will be taking advantage of that cash, by "finding opportunities that can help us penetrate markets where we can productively do that." FBR also expects approximately $140-160 million of free cash flow per year for Hyatt for 2010 and 2011. Many analysts and investors have suggested paying out a dividend but Hoplamazian said that is not be their policy at this time.

Hyatt's Corporate Governance

The topic of the Pritzker's family ownership is also one of keen interest among shareholders. In a rare interview, Pritzker shed light about the family's ownership and how corporate governance will be transparent. Pritzker said the "Hyatt IPO was a logical step" in transitioning the company from "a family owned to a publicly owned" entity. That was the result of a blueprint the Pritzker family put together in 2000. Hyatt also brought on two investors - Goldman Sachs and Madrone Capital - who Pritzker says were "great publicly traded companies and shared our orientation towards creating long term shareholder value."

Since its IPO on November 5th, its shares have advanced some 20%. Pritzker says Hyatt has attracted world class investors like the Abu Dhabi Investment Authority and the Government of Singapore Investment Corp.

Liza Tan contributed to this article.



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