Hyatt Hotels is one of the largest hotel chains in the world – and wants to continue to grow, especially in the luxury segment. In one of their rare interviews, Hyatt boss Mark Hoplamazian and Europe boss Javier Águila talk about the plans for Germany.
The lobby of the five-star Grand Hyatt hotel in Berlin-Mitte is paneled with light wood. Purple carpets lie on the green stone floor, and daylight streams in through a glass roof. Businessmen and hotel guests sit sunk in green velvet sofas.
CEO Mark Hoplamazian sits right next door in a windowless room. He rarely gives interviews to German media. But seven years after Hyatt began a major restructuring, he wants to talk about his company’s new strategy. For 18 years he has been at the helm of the hotel chain, which was founded in 1957 and now includes a portfolio of more than 1,300 hotels and employs 51,000 people.
Sitting next to Hoplamazian is Javier Águila, head of the Europe, Africa and Middle East region at Hyatt. Two employees from the communications department are also there. In the middle of the large dark wooden table there are spring flowers, bottles of water and a carafe of orange juice; the room is only dimly lit. During the interview, Hoplamazian and Águila put their iPads aside and instead reached for espresso.
Mr. Hoplamazian, Hyatt shares have been on the rise for months, reaching a record high at the end of February. Is this because the travel industry is finally doing well again after the Corona slump or is Hyatt currently on a particularly successful path?
Mark Hoplamazian: Both. The entire industry is doing better, but we have also gone through massive change as a company. For a long time, our company owned most of the Hyatt hotels, but in 2017 we announced a strategic shift and began selling our assets. We still own some hotels now, but our business is less capital intensive. Overall, we have been very consistent in our focus on the upper end of each hotel category, which represents the vast majority of our business. We have emerged from the pandemic stronger and are growing faster than our competitors.
Hyatt has so far been one of the top addresses for business travelers. Their new strategy now focuses on luxury, leisure and lifestyle. Which houses have you sold?
Hoplamazian: In five years, we divested $4 billion of property from a very diverse portfolio. These included business and trade fair hotels, but also resorts. We invested $3.5 billion in new growth areas. As a result, we have doubled the number of rooms in luxury hotels, tripled the number of rooms in resorts and quintupled the number of rooms in lifestyle hotels. More than 40 percent of our portfolio is now located in these areas, which is why we benefit disproportionately from the current trend towards private luxury travel. However, we did not reinvest directly in hotels, but in brands and management platforms.
What is behind these management platforms?
Mark Hoplamazian has been head of Hyatt Hotels since 2006.
(Photo: Hyatt)
Hoplamazian: There are different models that big brands use to market their owners’ hotels. Traditionally, companies like us offer management or franchise contracts through which we take over the sales and operation of the hotel. At Hyatt we talk about the network effect: We grow in markets where our guests are already traveling, but where we don’t yet have hotels. In Europe and the Middle East, for example, we have currently planned more than 70 hotels. We will open hotels in 29 new markets where we are not currently present. The hotels do not belong to us, but to third parties, but we own the brands and the management platform. The more markets we can cover through our Hyatt platform, the higher the share of travel volume we can capture. This also makes the network effect more attractive for guests and hotel owners.
You had initiated the transformation just described when the pandemic broke out. What impact did that have on your plans?
Hoplamazian: On a human level, it was a terrible time. We had to lay off many employees, many of whom we later rehired. But the positive thing about Covid was that we had to learn new skills. Our customer base was largely business people and they no longer traveled, so we had to look elsewhere for our demand. We also made one of our largest acquisitions, Apple Leisure Group, in fall 2021. The acquisition enabled us to double Hyatt’s global presence in the resort segment in one fell swoop. That was in the middle of the pandemic. Looking back, one might ask: What were you thinking? But actually it was one of the best acquisitions.
What makes you so sure?
Hoplamazian: We looked at the major crises of the past decades: the first Gulf War, the terrorist attacks of 9/11, the financial crisis and Covid. The trend has always been: Even if travel bookings in the overall market have plummeted, luxury private trips are still doing very well. Globally, it was private travel that picked up strongly again after the pandemic. The combination of both trends is currently providing the strongest growth spurt – that is, luxury vacation trips.
There are currently many trouble spots and geopolitical tensions. How do they get noticed for their chain?
Hoplamazian: There have been micro impacts, demand for resorts in Egypt and Jordan has shifted to the Canary Islands, for example. However, there were no negative effects on overall demand.
Águila: The Egyptian and Turkish markets have been moving up and down for 20 years, depending on their geopolitical environment. But one of our strengths is that we can always offer our customers an alternative.
Regardless of any crisis, you can implement significant price increases. Last year, Hyatt generated 17 percent more revenue from each room.
Hoplamazian: Yes, the average prices and margins are higher. Our margin has increased by three percentage points compared to the period before the pandemic.
What additional surcharges can you expect from your customers?
Hoplamazian: We don’t impose it on them, we react to the market. The growth in supply and new hotels is very low, but demand is relatively high. This means that higher prices can be imposed on the market. Overall, the increase may seem exceptionally high now, but if you average price increases over the period from 2019 to 2024, this is roughly equivalent to the increase in inflation. Prices are returning to levels that would have been expected anyway if the environment had been normal. Since new supply is still low in almost all markets, the price dynamics will continue. Because demand continues to grow faster than supply.
For seven years, Hyatt has been growing faster than all other hotel groups: They have added many more rooms, especially in the luxury segment, and another 650 new openings were still pending at the end of 2023.
Hoplamazian: Yes. We currently have 127,000 rooms in the pipeline worldwide, which corresponds to 40 percent of our current portfolio – a new record for us.
In 2023 you opened many luxury hotels, especially in Asia. What potential do you see there?
Hoplamazian: If you compare the share of the luxury segment in Asia with that in Europe and the USA, Asia is the strongest market. This also contributes to our reputation. For example, the Grand Hyatt brand has been rated number one by business travelers across Asia for 17 consecutive years. That’s because we deliberately opened Grand Hyatt hotels in every major market from Tokyo to Mumbai.
Where do you currently earn the most money?
Hoplamazian: By far in the USA, where we have the most hotels. China comes second, then Mexico. There are four European countries in the top 20.
Mr. Águila, as head of Europe, you also have an eye on the German travel market, one of the strongest travel markets in the world. How much potential do you see for Hyatt here – both as a location and for bookings in other countries?
Javier Águila is responsible for hotels in Europe, Africa and the Middle East for Hyatt. He previously founded a Spanish hotel group, which was acquired by Apple Leisure Group in 2019. The Apple Leisure Group has been part of Hyatt since 2021.
(Photo: Hyatt)
Javier Águila: We are already benefiting greatly from our cooperation with Lindner Hotels, through which we have gained 30 hotels in Germany. Part of the strategy is also to attract customers in this segment to our resorts on the Canary Islands, for example. We still have a lot of growth potential here. By the way, it’s not just about growing in numbers, but also in certain niches. In the lifestyle sector, for example, we are much stronger than the competition and could easily open a few more hotels in this segment in Germany.
Which new openings are already planned in Germany?
Águila: This year we are opening hotels in Berlin, Stuttgart, Leipzig and Hamburg with the JdV by Hyatt brand. A Kennedy89 and a Hyatt House will soon be added in Frankfurt am Main and we are planning to open a Hyatt Regency in Hamburg in the near future. We are still working on a few more projects at the moment, so it remains exciting.
How much would you like to invest in Germany and Europe?
Águila: We can’t give exact numbers, but our ambitions are very high. Since 2017, our presence in the region has grown by 79 percent and we want to increase the speed even further. There are many locations where we are not yet present and there are many brands that are already relevant to us and with which we can still grow.
Victoria Robertz spoke to Mark Hoplamazian and Javier Águila