High-end hotels have consistently proved the best recovery route for the hospitality industry, according to Mark Hoplamazian, president and chief executive officer, Hyatt Hotels Corporation.
Talking to Alexi Khajavi, president, Questex at the IHIF EMEA 2024 in Berlin, Hoplamazian said that high-end hotels had proved the star performer in the wake of several notable events, “leading the industry’s recovery after the first Gulf War, 9-11, the Global Financial Crisis, and most recently, post-pandemic”.
Hoplamazian underlined that luxury, leisure and lifestyle currently represent 40 per cent of Hyatt’s business. “Structurally, we have more high-end guests, and in the aggregate, we have the highest number of luxury hotels and resort locations compared to Marriott and Hilton,” he said. Hyatt also beats out its peers in terms of membership figures, and “more members mean greater penetration for the hotels that carry our brand”, he added.
In a lively discussion, Hoplamazian said that Hyatt was on an important path of “transformation”, tackling issues ranging from the firm’s capital structure to its approach to environmental, social and governance (ESG) issues. “Hyatt has been selling down the real estate that we had from 2017 onwards,” he confirmed. “Our number one target for redeployment is buying new brands.”
The business has proved successful in that strategy in recent times, reinvesting some $3.6 billion to secure the likes of Miraval, Apple Leisure and Dream Hotel Group, which he described as “great brands” which were also largely light on properties. However, he cautioned that history was littered with failed companies who had sold their assets too soon. “We started to sell when we had grown our management and franchise business to a scale where we could sustain our business”, he said. He also underlined that Hyatt had been financially savvy, selling its hotels at multiples of 16x, and buying franchises at 8x. “With the acquisition of Miraval, which did come with some real estate, we anticipated that wellness would be huge in the future, and didn’t really have that at Hyatt,” he added. He said that such deals had enabled Hyatt to increase its leisure profile, tripling its resort base, and add five times as many lifestyle hotel rooms to the group.
Despite pursuing an asset light model, Hyatt is still a notable real estate landlord – Hoplamazian said that the group remained the biggest owner of Hyatt hotels around the world. But this factor continued to equip Hyatt with “empathy” in its partnership models. He noted that when it came to signing deals with landlords, “we really do walk in their shoes”. He shared an anecdote from pandemic times, when Hyatt assumed it could break even at around occupancy rates of 40%. By year end, the business was breaking even at 20%. “We sat down with all our major owners and offered to help. We found that we could help many struggling REITs that owned Hyatt hotel to recover faster,” he said.
On the key topic of ESG, Hoplamazian said that “care” was a core value of the group. “Care is about understanding what guests really need and delivering on that,” he explained. Hyatt’s ESG strategy is dubbed “World of Care” to reflect its strong social approach. “We focus on bringing in young people, in the 16-25 age category, from deprived communities around the world,” he said, noting that many entry level jobs in hotels didn’t necessarily require a skill set. “Talent is equally distributed, but opportunity is not,” he remarked. On broader environmental matters, he said that Hyatt never sought to compete with its peers on ESG but shared ideas freely. While topics such as “Scope 1, Scope 2 and Scope 3” were often fiercely complicated, “we should all be working together to figure out the best way to move this forward”.
Earlier in the day, Hyatt Hotels Corporation unveiled plans for scaled growth in the leisure space in Europe, Africa and the Middle East (EAME) underscored by a record year of deal signings in 2023.
Hyatt’s global record pipeline of more than 127,000 rooms as of year-end 2023 is supported by a regional pipeline of more than 70 properties spanning Hyatt’s brand collections. After opening Grand Hyatt Barcelona in early April, Hyatt is expecting Zoëtry Halkidiki Resort & Spa and Park Hyatt London River Thames to join the portfolio as the region’s most anticipated openings for 2024.
The company reports it is poised to continue its growth momentum in capital and primary cities with additions like Andaz Doha, Park Hyatt Johannesburg or Thompson Rome and is expanding its focus to resort destinations with projects like Dreams Madeira Resort Spa & Marina, Alua Soul Costa Adeje or Miraval The Red Sea leading the pipeline.
In February of this year, Hyatt reported record total fee revenues in its annual results, leading to the highest cash flow from operations in the company’s history. For the full year 2023, 101 new hotels (or 23,965 rooms) joined Hyatt's portfolio, including 43 hotels (some 13,223 rooms) which converted to a Hyatt brand.