Hyatt CEO’s New Plan to Take Middle Class Travel Global

Emerging economies will see more tourism growth five years from now and Hyatt wants to be there when those tourists show up by taking its select service and extended stay brands on a major international expansion.

Hyatt announced last October that its Hyatt House and Hyatt Place extended stay and select-service brands would account for a large chunk of its pipeline in the near-term and now we’re getting more color about what that means.

Besides these two brands acting as the nerve center of Hyatt’s strategy in developing countries, CEO Mark Hoplamazian said the hotel will now lead with these brands in developed economies like the U.K. and Australia as well. This news comes after Hyatt missed Wall Street’s expectations for the second quarter.

Hoplamazian told investors during yesterday’s second quarter earnings call that of the 50 new hotels the company plans to open this year around the world about half will be select service and extended stay. And of that number about half of these hotels will be located outside the U.S.

“Our growth in our Hyatt House and Hyatt Place hotel base around the world is buttressed by continued strong financial performance for the brands,” said Hoplamazian during the call.

“In terms of environment, what’s going on in the environment, more broadly, I would say that the demand and pace and activity on the select service front with Hyatt Place and Hyatt House is extremely high everywhere. And this is a particularly important strategy for us because we recognize that as more and more people in what we call the commercial class or what you may call, in U.S. context, the middle class are coming in to travel in different places, especially India and China. So Hyatt Place and Hyatt House will be the brand that we lead with in a lot of markets in those countries.”

This represents the first international expansion of Hyatt House. It does have a property in San Juan, Puerto Rico. That brand will open properties in Mexico, China, Saudi Arabia, Malaysia, and Panama this year and Hyatt Place will open in the U.K., Australia, Brazil, Nicaragua, India, Honduras, and Thailand and already operates in 12 countries.

In the U.S. Hyatt’s select service revenue per available room increased 7.2% in the second quarter year-over-year just below 7.5% revenue per available for its full service hotels.

Hyatt Centric in High Demand

Hoplamazian also added that demand has increased for the new Hyatt Centric brand that launched earlier this year in the U.S. which will open properties in about a dozen U.S. cities this year (two properties in Miami and Chicago already opened). He also revealed that there are a “few markets in which there will be interesting group related projects that we’re pursuing right now and resort opportunities.”

“There’s a tremendous amount of interest in Hyatt Centric,” said Hoplamazian. “We’ve identified ourselves a number of sites around the country, over a dozen, that we’re pursuing to secure and entitle. But beyond that, we’re talking to developers – a couple of developers about multi-product, multi-property transactions and the demand for the Hyatt Centric brand around the world has been high. And I think that brand category is going to represent a good opportunity for additional full service, transient-focused growth for us.”