The big hotel groups have billions of dollars in cash. How they use it will affect their futures.
The man is Sean O'Neil.
Hotel groups around the world have a lot of cash. Seven of the best-known hotel groups had $7.3 billion in cash and short-term investments at the end of June.
How these hotel giants use their money will be of interest. Stakeholders hoping for some of that cash include property owners looking to sell hotel assets, workers looking for raises, executives hoping for corporate investment in their products, and shareholders hoping for a stock price increase.
Marriott is an example. It had over a billion dollars in cash and short-term investments at the end of last year, partly due to the uncertainty of the swine flu. The cash pile was $546 million by the end of June.
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Kathleen Oberg, chief financial officer of Marriott International, said during an earnings call that the company expects to return more than $2 billion to shareholders this year.
Major hotel companies are doing different things. Most said they would draw down their cash horde one way or the other. The value of cash is being eroded by rising interest rates.
Hyatt had nearly $2 billion in cash, cash equivalents, and short-term investments. A portion of the short-term debt it issued in late 2021, as well as some stock, will be paid down.
Hyatt is interested in buying hotels. It bought Hotel Irvine in California for 135 million dollars.
Hyatt's brand presence has been underrepresented in a popular destination where it has been purchased. Mark Hoplamazian, president and CEO of Hyatt, said during an earnings call that the company made an all-cash offer.
The company had $400 million in cash and liquid assets at the end of the second quarter.
The CFO said that the first priority was to invest in the business. External and organic growth opportunities are being explored.
In the first half of the year, the company delivered about $240 million in dividends and buy backs.
The company had more than $1 billion in cash and liquid investments at the end of the month. The company planned to give shareholders between $1 billion and $2 billion.
When companies buy back stock, investors like it because they push up the earnings per share and boost the stock price. If stock performance measures such as earnings per share rise, hotel executive compensation is usually designed to encourage it by rewarding top leaders.
When CEOs are incentivized to boost earnings per share as a way to boost their compensation, some analysts worry that they may do a lot of stock purchases. The incentives can deter CEOs from making poorly thought-through mergers and acquisitions simply because they have the money to spend.
Legislation just passed in the U.S. will charge businesses an excise tax on the fair value of stock they buy. The effect that will have on the practice is not known.
Accor had over one billion dollars in cash and short-term equivalents at the end of June. In the second quarter, it used almost 200 million dollars in cash to restructure and invest in Reef, a ghost kitchen company.
Choice Hotels had $6007 million in cash and short-term equivalents. It returned $42 million to shareholders in the first half of the year. Future share purchases are planned by the company. The company expects to pay more than last year's amount of dividends.
There were over a billion dollars in cash andliquid assets. The company said it would buy back half a billion dollars of its stock by the end of the year.
One of the world's largest operators and managers of hotels in China and elsewhere is Jin Jiang, which also has other businesses, such as restaurants and cruises. The company has yet to report earnings for a comparable period. It had $811 million in cash and short-term equivalents.
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