Hyatt: Most Jazz Hotel Company of the Year

As anyone who wants to be a jazz bore will tell you: it’s about the notes which aren’t being played. As anyone who has seen jazz movie masterpiece Whiplash will tell you: if you want to get the best out of something, beat it mercilessly.

So jazz isn’t for everyone. But paying attention to the notes which aren’t being played is something that the hotel sector has been working its way around to doing. It’s not all about bedrooms, there’s a lot of empty space out there. Likewise, making every aspect work its hardest is no longer optional. And its for these reasons that we’d like to nominate Hyatt as Most Jazz Hotel Company of the Year. Prize yet to be confirmed. A black polo neck, perhaps.

We first started to hear the twinkling of hidden notes in the group’s purchase of the me and all hotels brand, which garnered double prizes because a) it’s a conversion brand and there’s nothing more hidden note than a conversion brand and b) there was a lot of commentary around the non-room spaces.

The group said: “me and all hotels combine central locations, urban design, leading-edge technology and vibrant public spaces. With casual flair, they appeal especially to city and business travellers as well as urban locals by enabling both social interaction and productive co-working sessions. Local heroes from the areas of gastronomy, music, art and start-ups provide constantly new, individual experiences with pop-up kitchens, a wide variety of events and sustainable products.” Barely a bed mentioned among them.

Hyatt has been on a buying stuff jag of late, which is no great shock given its warchest – of which more later. At the company’s investor day last year it highlighted the acquisitions of Miraval, Two Roads Hospitality, Apple Leisure Group, and Dream Hotel Group since 2017, which it said had  “significantly” increased its brand presence in the fast-growing categories of all-inclusive, lifestyle and wellbeing, with the acquisition of Mr & Mrs Smith expanding its brand presence in luxury.

Hyatt has, on the quiet, become a handy illustrator of the trends of the time. If something is being talked about, Hyatt has either just bought or is about to buy something in its general area. Student accommodation for the well-heeled student in your proximity? Surely.

Helping to fund this is the group’s shift to asset-light, somewhat behind the trend compared to other hotel companies, but definitely going at it Whiplash style now. At the group’s investor day it reminded the assembled of its target of $750m in free cash flow and more than 80% asset-light earnings mix by 2025 ($602m and 76% in 2023). 

At its most-recent earnings call it reported $1.5bn of gross proceeds from the net disposition of real estate since the $2bn aspiration announced in August 2021. The group expects to generate approximately $3.0bn in cash through the combination of free cash flow and net cash generated from asset dispositions cumulatively from 2023 to 2025.

What’s it doing with this? Investing in high-growth, asset-light platforms and returning capital to shareholders of course. The cost of me and all was not revealed, but brands cost less than hotels and no amount of marketing people is going to persuade you otherwise.

Perhaps the most interesting of the group’s asset-light deals was the purchase of Mr & Mrs Smith, which cost it £53m for a super-fancy booking platform. Which had, let it not be lost on the reader, a strong brand of its own. It was the end for Hyatt’s relationship with Small Luxury Hotels of the world – which is now chums with Hilton – but Hyatt clearly felt its loyalty programme was better served by Mr & Mrs Smith. And earlier this year Mr & Mrs Smith duly added 700 hotels to World of Hyatt. 

Something that came up in the most-recent call and which is of interest to those with an interest in large lumps of cash was Juniper Hotels, the 50/50 jv the group has in India. It IPOd earlier his year with the Hyatt stake being valued at $475m at the time of writing. No further comment has been made around Hyatt’s plans for Juniper, which has helped it expand in the country, but it’s an agreeable number to have in your back pocket. 

Which leads us to Hyatt’s next move. It has no fear of buying large hotel groups, as we saw when it went after Starwood in 2015, despite the home of W’s larger size. The sector has driven itself mad with ongoing efforts to bring Accor and Hyatt together and, until the French group canned its split plans, rumours were close to credible. 

Hyatt knows how to take a dispassionate eye to its estate and make pragmatic decisions. It’s not so precious with its brands that it can bring in new ones, even in the distribution realm. So what next? We hear rumours around the Spanish groups, sniffs around Radisson. One thing is guaranteed: Hyatt won’t be marching to the beat of anyone’s tune but its own. 

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