"There are still potential headwinds in the short-term from both Europe and a challenging financing services sector," Chief Executive Mark Hoplamazian said during a conference call on Thursday.

Travel by the financial services industry, which has been cutting jobs, accounts for more than 10 percent of Hyatt's revenue.

The company, which is making significant renovations at several key hotels, said group demand from companies strengthened in the fourth quarter but caution persisted.

A business-led recovery has helped lift occupancy rates and given the hotel industry pricing power. Still, weakness in Europe has weighed on international results.

Hyatt (H.N) saw fourth-quarter average daily rates climb from a year earlier and said revenue per available room, or revPAR, was up 6 percent at owned and leased hotels open at least a year. RevPAR is a key measure of health in the hotel industry.

Morningstar analyst Chad Mollman said his firm expects revPAR growth to come under pressure because of the challenges in Europe as well as rising gasoline prices that can take a toll on travel by car in the United States.

He said growth in revPAR slowed in the fourth quarter from the third quarter for both Hyatt and rival Marriott International (MAR.N), which posted quarterly results late Wednesday .

Hyatt said that in North America, fourth-quarter revPAR gained 6.5 percent at full-service hotels and was up 5.5 percent at select-service hotels that offer limited food and drink outlets. International revPAR rose 2.9 percent.

Net income at Hyatt was $52 million, or 31 cents a share, in the quarter, compared with $6 million, or 3 cents a share, a year earlier. The latest quarter included a $28 million benefit tied to income taxes.

Analysts expected 13 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 8 percent to $990 million, compared with $1 billion expected by analysts.

Marriott, whose brands include Ritz-Carlton and Residence Inn, enhanced a prior forecast for 2012 revPAR growth and said group business appeared to be stronger for 2012.

"When we went into 2011, the booking pace was up about 2 percent," said Marriott spokeswoman Laura Paugh. "Going into 2012, the booking pace is up 9 percent, so that's a significant improvement."

Hyatt's shares gained 0.8 percent, or 33 cents, to $43.17 in New York Stock Exchange trading, while Marriott slipped 7 cents to $34.66.

(Reporting by Karen Jacobs; Editing by Derek Caney, Maureen Bavdek and John Wallace)

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