Hyatt Hotels’ Select Service Category Leads the Brand’s Growth

Of the 50 properties that Hyatt Hotels is opening in 2015, over 50% of them are select service brands, including Hyatt Place and extended-stay Hyatt House.

Hyatt CEO Mark Hoplamazian shared the company’s bullish focus on the two hotel flags during this week’s Q3 earnings call. Revenue per available room (RevPAR) for Hyatt overall in the Americas for Q3 was up 5.4% over last year, while select service RevPAR in the U.S. jumped 7.1%.

“We expect select service being an increasingly important fee generator going forward,” said Hoplamazian. “In fact, Hyatt Place and Hyatt House account for roughly 40% of the number of rooms in our contracted base for new hotels,” which total about 260 properties and 56,000 rooms in the pipeline.

Also driving the growth of select service, most Hyatt Place and House assets are franchise owned and operated, which is becoming a larger part of Hyatt Hotels’ global business development strategy.

Hoplamazian said, “Franchise fees have more than quadrupled since our IPO, benefiting from organic growth and conversions, and reflecting the strength of our select service brands.” He added that franchise fees are driven by hotel revenues, not hotel earnings.

Presently there are 235 Hyatt Place properties worldwide, up from 209 a year ago. In the first nine months of 2015, RevPAR at Hyatt Place increased 8.1% and ADR (average daily rate) was up 6.3%, compared to the same period in 2014 for comparable hotels.

“Select service is the fastest growing category in the hotel industry because, I believe, it’s better meeting the needs of guests both from a business and leisure perspective,” says Steven Dominguez, VP of brand experience for Hyatt’s select service and all-inclusive resort brands. “The select service category offers people more of what they want and less of what they don’t, and it does so at an affordable price point both for consumers and developers.”

Millennial business travelers are especially fueling the growth of Hyatt Place due to the attractive price point, social design of the lobbies, and a smart guest room layout.

Starting with the lobbies, they’re generally one large open space with separate zones surrounding the full bar and to-go food outlet. There’s a very conscious design vision integrating the lobby seating, bar seating, and breakfast room, with a lot of natural light and few choke points.

“It’s kind of how we act generally,” Dominguez told us. “We engage when we want to but we also want our own private space, so the Hyatt Place lobbies are designed to be flexible.”

The user experience is intuitive to navigate above all else. Dominguez says the goal is to deliver on Hyatt Place’s brand promise that prioritizes a frictionless, seamless travel experience for people who want to get in and out of the hotel in as efficient a manner as possible.

In the guest rooms, the “Cozy Corner” is an L-shaped couch next to a slim two-foot wide, floor-to-ceiling divider separating the living space from the bed(s).

It’s a subtle design nuance but the couch is inviting because the divider sets it apart from the rest of the room.

While there’s a lot of talk about how Millennials are drawn to design and lifestyle hotels, there’s also a big demand for efficiency and speed. During recent stays at Hyatt Place in Austin and Yonkers, the crowd was mixed in age, and a couple younger guests told us how they were surprised about how the flow was so intelligent and intuitive. We like the free Wi-Fi and tons of plugs, naturally.

Design is contemporary, corporate and consistent, but then, no one is hanging out at a Hyatt Place for an extended period of time.

“Hyatt Place is sort of like a Swiss Army knife that allows guest to do just what they want with just what they need,” explains Dominguez. “I think overall Millennials are looking to get more out of life, and the hotel isn’t so much the destination, as life is the destination.”