Hyatt Hotels Corporation (H)

Cash conversion cycle

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Days of inventory on hand (DOH) days 2.85 3.44 3.96 3.81 3.91 4.29 4.26 4.57 4.29 5.12 5.30 5.70 8.30 7.59 7.57 6.05 6.60 10.58 8.28 11.41
Days of sales outstanding (DSO) days 51.99 44.38 42.99 46.85 49.27 42.88 44.96 47.20 50.78 46.77 50.09 57.86 70.23 52.32 71.10 92.82 59.95 41.41 28.22 26.07
Number of days of payables days 169.48 148.93 214.86 227.97 213.97 158.45 206.99 248.51 238.25 228.55 366.99 389.24 433.85 91.88 92.51 68.56 74.76 76.33 69.99 126.42
Cash conversion cycle days -114.63 -101.11 -167.90 -177.31 -160.79 -111.28 -157.77 -196.74 -183.18 -176.66 -311.60 -325.68 -355.33 -31.97 -13.84 30.31 -8.21 -24.33 -33.49 -88.94

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 2.85 + 51.99 – 169.48
= -114.63

The cash conversion cycle of Hyatt Hotels Corporation has shown significant fluctuations over the reporting periods. A negative cash conversion cycle typically indicates that the company is able to collect cash from customers before having to pay its suppliers, which can be advantageous for liquidity management.

From March 31, 2020, to December 31, 2021, the cash conversion cycle remained consistently negative, indicating efficient management of cash flows in terms of collections from customers and payments to suppliers. However, from March 31, 2021, to June 30, 2024, the cash conversion cycle turned positive, showing a reversal in the efficiency of the company's cash conversion process.

The cash conversion cycle reaching a peak of -355.33 days on December 31, 2021, suggests that the company was collecting cash much earlier than paying suppliers. This could be due to tightened payment terms with suppliers or delays in managing accounts payable.

Subsequently, a decreasing trend in the cash conversion cycle was observed from March 31, 2022, to December 31, 2024, although it remained negative. This implies a more efficient turnaround of cash from operations into payments to suppliers during these periods.

Overall, while the negative cash conversion cycle indicates efficient cash management for Hyatt Hotels Corporation, it is essential for the company to closely monitor and manage its working capital components to sustain this efficiency and ensure continued liquidity in the future.