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Geared Up For Growth

Franchise Focus, Brand Extension Helps Fuel Growth For Hyatt Hotels

Monday, December 11, 2017
Dennis Nessler
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Hyatt Hotels Corporation continues to execute on an aggressive international expansion strategy for its burgeoning brand lineup as the company in recent weeks has unveiled a total of three new properties in Shanghai, China and Cannes, Frances.

Last week Hyatt announced the former Grand Hyatt Cannes Hotel Martinez will join the company’s upper-upscale and luxury soft brand, The Unbound Collection by Hyatt, when it reopens as Hotel Martinez in the spring of 2018. In addition, the Hyatt Place Shanghai Hongqiao CBD and Hyatt House Shanghai Hongqiao CBD debuted late last month marking each brand’s initial foray into the Shanghai market. Hyatt Place—which now has locations in as many as 18 countries—also expanded into Australia for the first time this year.

Julienne Smith, SVP, development and owner relations, Hyatt Place and Hyatt House, North America, talked to Hotel Interactive® at last month’s Lodging Conference specifically about the rapid growth of the company’s select-service brands, as well as some ongoing company initiatives.

“As we’ve progressed in the last 12 years of developing Hyatt Place and Hyatt House, fast forward to today we’re more than half of the company now from a property standpoint. So we’re increasingly becoming a significant piece of the pie, but we haven’t veered away from the ethos that we’ve got to be in the right locations with the right partners. I actually think that’s why we’ve grown the way we’ve grown because we add units which are showcases and great locations where consumers want to be,” she said.

The company’s portfolio now includes some 729 properties and 13 brands in total. The two aforementioned brands combine for more than 350 of those locations. Hyatt Place—an upscale limited-service flag which was launched in 2005 following the company’s acquisition of AmeriSuites—includes roughly 297 properties globally. Hyatt House, meanwhile, was launched in 2012 as an upscale extended-stay offering following the company’s 2005 acquisition of Summerfield Suites and now is comprised of some 84 locations.

Smith pointed out that the company is in the process of creating the third generation of Hyatt Place, which is expected to be introduced to developers in 2018. She added that one adjustment could include taking some square footage out of the rooms where it can and noted “the lobby will probably have the most significant change.”

The brand continues to expand its food and beverage offering, which now includes breakfast bowls and a full bar with microbrews and local wine. Smith also acknowledged that Hyatt Place will introduce full prototype models for all of its regions internationally.

Smith cited some changes in the offing for Hyatt House as well, which include making The H BAR a full-scale bar and charging guests rather than offering complimentary beer. Smith noted that change is based on consumer research.

The Hyatt executive added that her team will continue to assess the rooms, roughly 30 percent of which have become transient as part of the last generation of product. “We’ll continue to look to see if one bedrooms are relevant? How can we make the studios more efficient? We continually balance what the developer wants for his or her cost basis and investment thesis and what the consumer is asking for because those aren’t always aligned,” she said.

Smith noted that Hyatt also has a robust pipeline of product with deals signed for some 315 properties. She further discussed the increased distribution as it relates to the privately-held, Chicago-based company’s breakthrough into franchising a little more than a decade ago.

“We’ve seen a big growth spurt on the franchise side and 12 years ago we didn’t franchise, so that’s become a significant piece of our business,” she said, adding that the company has seen considerable growth in two of its newer brands, Hyatt Centric and Unbound, both of which are also franchised.

For example, the Unbound Collection by Hyatt, which was launched in 2016, already has five properties open, not including the Hotel Martinez. Meanwhile, Hyatt Centric, a full-service, lifestyle brand continues its global expansion. This summer the brand opened its first property in Central America with the Hyatt Centric Guatemala.

Meanwhile, the company increased its emphasis on wellness when earlier this year it acquired Miraval—a provider of wellness and mindfulness experiences. Smith detailed the strategy.

“We’re looking to be more meaningful and engaged with our consumers, more than just earning points and burning them at hotels. That is a great way to engage with your consumers, but everybody does that so how can we be a little different? We pay attention to the consumer world in general and wellness is a huge piece of the business and we’ve seen how successful Miraval has been. Anybody who’s been there can’t speak enough about how great it is and there are only a couple of competitors in that space,” she said.

Hyatt acquired one of those competitors as well with the subsequent acquisition of exhale spa company this past summer.

In addition, Hyatt continued to branch out into other areas of hospitality as it entered into a joint venture with Oasis, a home sharing platform.

Smith offered her perspective on the deal. “We can have some really great visibility into that kind of business that only appears to be growing…It’s a viable piece of hospitality these days. There’s a consumer base who swears by Airbnb or VRBO. It’s important for us to stay relevant and innovate and be ahead of the consumers and in line with the consumers. They’re asking for a certain experience and we’ve got to focus on delivering that great experience,” she said.

In March the company launched its World of Hyatt loyalty program, which Smith stressed is a key part of the company’s focus heading into 2018 as well

Dennis Nessler    Dennis Nessler
Hotel Interactive®, Inc.
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