Hyatt has a little over 600 hotels. That’s one-tenth the size of Marriott. There’s Marriott, Hilton, IHG, and Accor as players and there just aren’t chains in Hyatt’s peer group anymore.
They did try to buy Starwood themselves but their complex stock structure (two tiered stock giving outsized control to the Pritzker family) was a stopper and Marriott bested them. They tried to buy Kimpton but IHG was willing to pay far more (likely too much, this deal doesn’t seem to be working out as well for IHG as hoped).
Now who else is left to buy? There are the Omni Hotels of the world but those sorts of deals wouldn’t move the needle. Omni is one-tenth the size of Hyatt.
You’d expect Hyatt itself to be an acquisition target and it may be, but any deal has to be friendly and favorable towards the Pritzkers because of that two class stock.
So if you’re Hyatt where do you go? They’ve got a couple of things in the works, neither one possibly game changing.
- Experiments in home sharing but this gets them only 20 destinations around the world.
- Spa and lifestyle focus if they can figure out how to integrate themselves into the lives of guests outside the hotel, and become even more premium inside, their overall brand becomes more valuable and they earn more of a revenue premium.
But buying spas and colon cleansing hotels isn’t going to change their fundamentals. They do skew high end, but more of their properties are actually limited (‘select’) service and that’s where their growth has been.
So while they’ve been focused on their high end brand, they also want to be the chain for the global middle class with those select service brands ‘gateway’ hotels moving people up the average daily room rate ladder to full service properties.
Hoplamazian said the middle class, which he refers to as the commercial or consuming class, includes people traveling for business but also with their families. “These are people who are working, and have jobs that take them on the road, but also people who are choosing to actually spend money on travel,” he told Skift. “I think that population is growing tremendously.”
…“For our focus, in the markets in which those populations are growing the fastest, China would be at the top of that list,” said Hoplamazian. “Our focus is to really focus on the expansion of Hyatt Place and Hyatt House, which are select-service brands, which are at a more approachable price point than our full-service hotels.”
Hoplamazian views more affordable brands such as Hyatt Place and Hyatt House as gateways to other brands in the Hyatt’s portfolio. “We need to pay attention to developing those populations, those people, as potential outbound travelers for the brand,” he said.
The problem for Hyatt is that they’re not the only ones looking to China, while they’ve grown in the region they remain a relatively small presence there.
I still believe that Hyatt’s top elite tier remains the most rewarding overall hotel status. But it takes a lot of effort to remain loyal to the chain given their limited footprint. Whether focusing strategically on the worldwide middle class, or convincing Americans that all of their cleansing needs can be met by Hyatt, they aren’t going to get to scale. They need to acquire or be acquired.