Hyatt has been diligently refining its strategy over the past few years, aiming to keep up with major hospitality brands such as Marriott, Hilton, and IHG. Its latest move in this direction is the acquisition of Standard International, the parent company of The Standard and Bunkhouse Hotels brands. This acquisition is expected to be finalized by the end of the year, marking a significant expansion of Hyatt's lifestyle and luxury offerings.
Hyatt's Strategic Expansion
The acquisition of Standard International is part of Hyatt's broader strategy to fill gaps in its portfolio. Hyatt's portfolio, though smaller than some of its competitors, has seen substantial growth in the lifestyle segment. Since 2017, Hyatt's lifestyle portfolio has grown fivefold, and this momentum shows no signs of slowing down. The purchase of Mr & Mrs Smith earlier this year further expanded Hyatt's reach into new markets such as Croatia, Fiji, and the British Virgin Islands.
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Hyatt plans to create a new lifestyle group based in New York, under the leadership of Standard International's Executive Chairman, Amar Lalvani. This new group will focus on marketing, design, and nightlife, further solidifying Hyatt's position in the luxury and lifestyle segments.
Integration into the World of Hyatt Program
Once the acquisition is finalized, the 21 hotels under Standard International, including The Standard, London, and The Standard, High Line in New York, will join the World of Hyatt program. This integration will also include hotels in sought-after locations like Ibiza, Bangkok, and the Maldives, with more than 30 additional projects in the pipeline.
Hyatt's focus remains on maintaining a high-end position across its brand segments, including luxury, lifestyle, and midscale. The upcoming launch of Hyatt Studios, an extended-stay model, reflects this commitment to quality while also targeting budget-conscious travelers.
Hyatt Studios: A New Budget-Friendly Brand
Hyatt Studios is set to become Hyatt's most affordable brand, yet it will still aim to provide a premium experience. The first Hyatt Studios location is scheduled to open in Mobile, Alabama, in the first quarter of 2025. This new brand will target markets where Hyatt currently has little presence, such as Billings, Montana, and will cater to travelers like government workers, insurance adjusters, and health care professionals.
The design of Hyatt Studios has been carefully crafted, with input from focus groups and existing Hyatt customers. Even small details, like the placement of garbage cans and the height of shelves, have been meticulously considered to meet the needs of extended-stay guests. This attention to detail underscores Hyatt's commitment to providing a quality experience, even in its most budget-friendly offerings.
Hyatt's Asset-Light Approach
In recent years, Hyatt has shifted towards an asset-light business model, where the majority of its hotels are managed, licensed, or franchised by others. This strategy has allowed Hyatt to grow rapidly, tripling its number of hotel rooms since 2009. The company now generates substantial free cash flow, which it uses to invest in growth and return capital to shareholders.
Hyatt's leadership believes that this asset-light approach provides the flexibility needed to continue expanding its portfolio while maintaining financial stability. The company has been actively selling off its real estate assets since 2017, using the proceeds to acquire new brands and strengthen its position in the market.
World of Hyatt's Ongoing Evolution
As Hyatt continues to grow, its loyalty program, World of Hyatt, is also evolving. While Hyatt Studios will offer fewer points per dollar spent compared to other Hyatt brands, the company remains committed to providing valuable benefits to its loyal members. World of Hyatt has seen significant growth, with a 20% increase in members over the past year.
In addition to traditional hotel stays, World of Hyatt now includes unique experiences like glamping with Under Canvas and stays at properties under the Mr & Mrs Smith brand. These offerings reflect Hyatt's focus on providing diverse and memorable experiences for its members.
Hyatt's recent acquisitions and the launch of Hyatt Studios demonstrate the company's commitment to growth and innovation. As it continues to expand its portfolio and refine its offerings, Hyatt is well-positioned to compete with the largest players in the hospitality industry.
Source: Forbes