Hyatt is in a tough spot strategically. They aren’t big enough to compete for a significant share of global corporate business, with only about 1/8th the hotels of Marriott and Hilton. They aren’t big enough to compete for the bulk of wallet share from frequent guests — they just don’t have hotels everywhere customers need to be.
Hyatt tried to expand via acquisition but they lost out in the race for Kimpton and then were unsuccessful going after Starwood.
It’s tough for Hyatt to be acquired in a hostile takeover, the structure of their stock gives the Pritzker family too much say. But they could be ripe for a friendly deal.
Grand Hyatt San Francisco
And while the changes to the World of Hyatt program seemed at first glance geared towards a bigger chain than Hyatt — raising elite status tier requirements made sense if they had tripled their size by buying Starwood — much of the program is about lowering costs. Here are six ways the program is designed to save hotels money.
Third quarter earnings were down over 70% year-over-year.
And now Hyatt is shifting its hotel ownership strategy.
- They’ve historically talked about ‘asset recycling’ — selling hotels to allow them to buy other hotels in key markets. They will buy a property that they view as strategic, bring it into the portfolio, and eventually selling it with a long-term management contract and using the cash to move strategically into another property.
- But they’re now going to move more towards an asset light model, targeting the sale of $1.5 billion in hotel assets, focusing more heavily on the fee income from hotel management.
It’s seemed like the chain has been strategically listing. They brought in ex-Starwood executive Mark Vondrasek to lead the loyalty program and also try to integrate the new touchy feely brand stuff Hyatt bought. They’ve acquired Miraval and Exhale spas and are supposed to connect with customers emotionally through cleanses and relaxation or something.
Then he brought in another ex-Starwood executive to run the loyalty program day to day.
Park Hyatt Chennai
New leadership for the loyalty program — that bypasses the Chief Marketing Officer — is something you do when things seem wrong. Hyatt has claimed the new program has performed well but the metrics they’ve talked about don’t show that at all.
Hyatt CEO Mark Hoplamazian continued to offer the spin in the chain’s earnings call that new program signups are an indication all is well with World of Hyatt — despite the changes to the program coming at the elite levels and not the new member level, and when new program signups is what you’d expect when introducing a discounted ‘member rate’ that requires joining the program.
We continue to enhance guest engagement through branded experiences that resonate with the high-end traveler. Additionally, World of Hyatt continues to attract new members and deliver a value proposition that is appreciated by our guests.
Nonetheless Hyatt’s CEO says we can expect changes to the program over the next year.
“They both bring tremendous depth of experience in taking consumer info and data and translating that into initiatives that really add value to the program. You can expect to see some changes over the next year as they spool up their efforts.”
We don’t know what those changes are going to be at this point. They could just wind up being better integration of Hyatt’s lifestyle brands into the loyalty program, perhaps offering World of Hyatt elite members a free master cleanse at Hyatt House properties.
However it’s clear Hyatt’s CEO doesn’t see World of Hyatt as it stands today as being where they want the program to be.