The Standard London
Hyatt has been on a strategy reset for the past several years as it looks to compete with larger hospitality brands like Marriott, Hilton and IHG. Its focus has been on filling in gaps in its portfolio, which is notably smaller than its competitors. This has included notable acquisitions in the all-inclusive space for vacation destinations (Apple Leisure) as well as high-end, lifestyle properties like Dream Hotel Group.
Since 2017, Hyatt has grown its lifestyle portfolio by five times what it was previously. And the momentum has not stopped.
Yesterday, the company announced the acquisition of Standard International, parent company of The Standard and Bunkhouse Hotels brands, with a closing date on the deal expected by the end of the year.
Hotel du Palais in Biarritz, a famous luxury palace, France, and part of The Unbound Collection by … [+]
It is a “doubling down” of sorts for Hyatt on lifestyle, which already makes up 40% of its portfolio (larger than its competitors). The purchase of Mr & Mrs Smith expedited this by giving World of Hyatt presence in new markets like Croatia, Fiji and the British Virgin Islands.
Hyatt plans to add a new lifestyle group in New York, under the aegis of Standard International’s Executive Chairman Amar Lalvani, to give more focus and attention on this segment from a marketing, design and nightlife focus.
The Standard High Line New York City
Once the deal is finalized, the 21 franchised and managed hotels will join the World of Hyatt program. Among Standard’s most notable hotels are The Standard, London, The Standard, High Line in New York and Hotel San Cristóbal, Baja California, Mexico. Its destination list includes hot spots like Ibiza, Bangkok and the Maldives. There are more than 30 projects in the works to join the brand, starting as soon as next year.
This news is just one piece of the strategy that is driving the brand forward. A key focus for Hyatt is maintaining a high-end position in each brand segment it operates, whether that is luxury, lifestyle or midcale. These are some of the ways that Hyatt is evolving its portfolio.
Extended stay on a budget
A model guest room at Hyatt Studios
Coming soon is the opening of Hyatt Studios, a brand that Hyatt has high hopes for and expects could eventually become its largest brand. This extended-stay model on a budget will operate on the higher tier of the segment while remaining lower cost to operate.
Rather than compete only on cost, it prefers to spend where it can to maintain its larger brand image. Hyatt Studios will be no different. While it will be the most affordable brand (something that varies by market conditions) within the portfolio, Hyatt Studios will rely on experience from its older sibling Hyatt House to guide its execution.
Its competitive set will include Home2 by Hilton and TownePlace Suites by Marriott.
The lobby of Hyatt Studios will have a grab-and-go market with self checkout as well as a … [+]
But, launching a new brand is not easy. A key component is encouraging existing owners and developers as well as new ones to join the bandwagon. Its model rooms in Bensenville, Illinois, have already entertained developers and investors from around the world.
Hyatt Studios is targeting tertiary markets like Billings, Montana and Mobile, Alabama as well as pockets of the country where it does not already have much presence. The first opening will be in Mobile during the first quarter of 2025. It will serve as a test model for how future properties can find success.
The focus customer includes government workers, insurance adjusters and health care workers, among others, who are looking for an extended stay product that balances quality with price. It can fill in the gaps with airport locations and those that target leisure travelers. Traveling youth sports teams is a perfect example of where the brand fits, something that was a gap in the overall brand lineup, says Mark Vondrasek, chief commercial officer for Hyatt.
Decisions not made lightly
This will be Hyatt’s first upper-midscale brand in the Americas.
Designers for this new brand, which Hyatt believes will eventually outgrow Hyatt Place, take an exacting focus on the smallest of details from the placement of garbage cans within the room to the height of coffee tables.
Using focus groups of repeat Hyatt customers as well as independent travelers (and existing owner insight), decisions can evolve over time. Its model rooms for the yet-to-open Hyatt Studios brand have gone through multiple iterations as they are tested and reviewed.
One finding was that the placement of shelves in the room needed to be lowered so that guests can use the very top shelf for additional storage (a key feature for extended stay guests). This came from feedback from guests who wanted a place to store empty suitcases, which now fit above the traditional closet, as well as from housekeepers, who said it was difficult to reach the high level without a ladder.
Designers seeks this type of internal insight from those that work in management, housekeeping and operations to be sure that it gets it right when launching a new brand.
A standard Hyatt Place guest room, which is currently the largest World of Hyatt brand.
Potential customers are also a key part of the decision-making process. Brand leaders relied on similar guests for its other extended-stay brand Hyatt House to help consult in the room development here. While Hyatt Studios will sit one step below in terms of price and offering, it still needs to meet the same needs and standards.
Hyatt’s team learned that certain corporate and government contracts would not even consider a hotel if it does not have certain amenities (like stove-top ovens or microwaves). Properties without certain amenities are filtered out of their travel portals from the beginning. This is all key insight that a brand must get right from the beginning to avoid retrofitting properties later at great expense.
Hyatt’s asset-light approach
Dubai, United Arab Emirates – November 1, 2010: Grand Hyatt Hotel in the Bur Dubai district.
Hyatt has been moving quickly to an asset-light portfolio where hotels are managed, licensed or franchised by others under its own umbrella. Since 2009, the company has tripled its number of hotel rooms and grown its position in the luxury and lifestyle market.
At Hyatt’s investment day in 2023, Joan Bottarini, Hyatt’s chief financial officer, said, “With substantial free cash flow generated from asset-light earnings, together with cash generated from continued asset dispositions, we believe we will continue to have significant flexibility to invest in growth and return capital to shareholders, while maintaining our investment grade profile.”
Grand Hyatt Baha Mar in the Bahamas
Put another way: Hyatt can fast forward into high growth mode with a free-cash flow model when it lets other people run the hotel.
“Hyatt has been selling down the real estate that we had from 2017 onwards,” said Mark Hoplamazian, Hyatt’s president and chief executive officer, at a hospitality conference in Berlin earlier this year. “Our number one target for redeployment is buying new brands.”
Hospitality Investor’s Isobel Lee reports that Hyatt is still the largest owner of its hotels around the world, but that this helps the company gain more understanding of what its partners are looking for when investing with the brand.
World of Hyatt evolves, but award chart here to stay
The lobby of Párisi Udvar Hotel Budapest, which is part of The Unbound Collection by Hyatt.
Hyatt Studios will be the first brand in World of Hyatt to limit earnings by half. While all other World of Hyatt brands earn five points per dollar spent, guests at Hyatt Studios would only earn 2.5 points per dollar spent. World of Hyatt elite status members would continue to earn their standard bonus multipliers, and those using a Hyatt co-branded credit card would earn bonus points for using the card for their stay as expected.
Limiting the number of points earned at certain brands is nothing new. Hilton Honors and Marriott Bonvoy both have a similar approach to their budget-focused brands.
The Treehotel in the Swedish Lapland region, which is part of Mr & Mrs Smith.
Another loyalty point of differentiation within World of Hyatt, which wins accolades from its members for being one of the last-standing programs to continue to offer an award chart that helps members understand how many points they need for a redemption, is that Mr & Mrs Smith does not fit into the award chart.
The reasoning, according to Vondrasek, is that an award chart relies on hotels having a standard room type that a property can put into the redemption pool. Mr & Mrs Smith hotels do not have “standard rooms” in the same way that a city hotel might. Instead, its hotels have so many room types that its treehouses, castles and island retreats accommodations do not easily fit into an award chart.
Vondrasek points out that loyalty programs were built for more traditional hotels where the room types were fewer.
While there was online criticism that these redemptions adhered to a dynamic pricing model, Vondrasek says it has more to do with the challenge of how to value rooms at a points tier when they are all so different. He assures that the award chart model is not going anywhere anytime soon.
Under Canvas offers glamping experiences for World of Hyatt members.
World of Hyatt is growing at an unprecedented pace, adding members with great fervor. In the last year alone, the brand has seen a 20% boost in the number of members compared to the year before with an estimated 50 million members. Vondrasek says recent additions to the portfolio like Under Canvas (a glamping experience in U.S. national parks that is now part of World of Hyatt) and Mr & Mrs Smith has really driven that growth.
According to Vondrasek, he expects World of Hyatt to add even more outdoor experience partners in the coming years because it is something that really resonates with members. Under Canvas and Hyatt have already surpassed their expectations on bookings after their first month. World of Hyatt elite members receive standard benefits like bonus points and breakfast for Globalist members.
With World of Hyatt’s smaller scale, it seeks to offer greater benefits to loyal members as it grows its footprint. This includes things like its fiercely popular Guest of Honor benefit, where elite status members can share their perks with someone else who may have never stayed at Hyatt, and the gifting of club lounge access or free-night awards (a new feature that Hyatt says was an immediate hit).
Balance and well-being, both physical and emotional, are key focal points for Hyatt, post-Covid.
Members will even be able to earn points for working on one of more than 900 Peloton bikes being added to Hyatt properties. MasterClass is another way that Hyatt is leaning into the well-being space. Its personalized, online workouts are coming to Hyatt fitness centers. Post-Covid, the brand is looking to be more thoughtful about how it incorporates well-being into its properties to drive loyalty.
Hyatt’s acquisition of Miraval helped it expand its wellness focus. The company has its “well-being collective,” which is a group of 50 hotels and resorts around the world where meeting planners and guests can expect the best health and wellness programming while earning and redeeming points. Even the free World of Hyatt app has free content from Headspace and white noise to encourage restful sleep.
“We are so genuinely happy with the program,” says Vondrasek. “It feels to me like loyalty programs in general are going into more of a tightening…We’ve always felt like World of Hyatt could be a point of distinction in the loyalty space, which is why giving members more choice on how they earn and use points and status benefits is so important.”
