Research Update: Hyatt Hotels Corp. Downgraded To 'BBB-', On CreditWatch Negative Due To Deep Q2 Contraction, Ongoing Travel Downturn

On March 17, S&P Global economists said the world's biggest economy has fallen into recession. Based on data and news reported since, we now see the toll on U.S. GDP will be far more severe than we once thought, with the contraction showing up in the first-quarter figure and worsening substantially in the April-June period. We are moderately revising our assumption that a near total collapse in U.S. demand for hotel rooms may persist for months due to the extraordinary restrictions on travel and movement (federal guidelines remain in place at least until April 30), combined with a severe contraction in the second quarter, with a moderate recovery beginning sometime in mid-2020. Compared with our previous base case, these revised

...- On March 17, S&P Global economists said the world's biggest economy has fallen into recession. Based on data and news reported since, we now see the toll on U.S. GDP will be far more severe than we once thought, with the contraction showing up in the first-quarter figure and worsening substantially in the April-June period. - We are moderately revising our assumption that a near total collapse in U.S. demand for hotel rooms may persist for months due to the extraordinary restrictions on travel and movement (federal guidelines remain in place at least until April 30), combined with a severe contraction in the second quarter, with a moderate recovery beginning sometime in mid-2020. - Compared with our previous base case, these revised assumptions may delay recovery for Hyatt and its hotel system, and cause the company's leverage to spike higher and recover more slowly. - We lowered our ratings on Hyatt to '###-' from '###' and placed them on CreditWatch with negative implications. - The...

Research Update