Tear Sheet: Hyatt Hotels Corp.

The company's financial policy cites gross leverage mostly because it typically holds substantial cash balances and short-term investments, primarily for working capital needs (cash balance was $1.095 billion as of Sept. 30, 2024). Hyatt has also periodically used cash for opportunistic acquisitions. Most recently, the company closed its $150 million acquisition of Standard International and announced its intention to invest €359 million into a joint venture with Grupo Pinero. While these acquisitions will temporarily reduce Hyatt's cash and increase its leverage, they will also increase its fee base and strengthen its World of Hyatt portfolio. Nonetheless, we expect the company will balance its operating cash flow, the cash proceeds from its asset sales, and its shareholder returns such that it

...November 18, 2024 While S&P Global Ratings expects Hyatt's net leverage--pro forma for its recent transactions--will remain below our 3x net leverage upgrade threshold, Hyatt's financial policy to maintain gross leverage of 3x remains a key risk factor and a constraint to the rating. The company's financial policy cites gross leverage mostly because it typically holds substantial cash balances and short-term investments, primarily for working capital needs (cash balance was $1.095 billion as of Sept. 30, 2024). Hyatt has also periodically used cash for opportunistic acquisitions. Most recently, the company closed its $150 million acquisition of Standard International and announced its intention to invest 359 million into a joint venture with Grupo Pinero. While these acquisitions will temporarily reduce Hyatt's cash and increase its leverage, they will also increase its fee base and strengthen its World of Hyatt portfolio. Nonetheless, we expect the company will balance its operating cash...

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