For profitable hotel companies like Hyatt, it's both a buyer's and seller's market right now.
Chicago-based Hyatt Hotel Corp. may not have succeeded last year in reportedly attempting to acquire Starwood Hotels & Resorts, but if the company’s first quarter 2016 earnings call was any indication, it’s clear the company is eager to both sell and buy new properties and perhaps, brands, going forward.
During the conference call, CEO Mark Hoplamazian and new CFO Patrick J. Grismer both dropped hints about Hyatt’s future plans for buying and selling, without delving into too many details.
Their statements, however, point to future growth strategies for a company that, unlike its competitors, is not pursuing an asset-light strategy, and is more interested in what Hoplamazian has described as “asset recyling” while, at the same time being more focused on high-end travelers than chasing scale for scale’s sake.
In his prepared remarks, Hoplamazian said, “The hotel transaction market appears to be robust, and we intend to be an active participant, both as a potential buyer and a potential seller. Our strong balance sheet is an important enabler in that regard …”
He pointed to Hyatt’s recent acquisitions, namely the purchases of the Nikko Hotel in Mexico City (now the Hyatt Regency Mexico City) and The Peabody in Orlando (now the Hyatt Regency Orlando), as well as The Driskill in Austin, that demonstrate the company’s “ability to move the needle at the property” level and that the company intends to do the same with its recent $238 million purchase of the 380-room Thompson Miami Beach. That property was converted to The Confidante, and added to Hyatt’s newest brand, The Unbound Collection by Hyatt.
This year, in addition to buying Thompson Miami Beach, Hyatt opened its newest 436-room property in Rio de Janiero, of which it is a 100-percent owner. In total, the company is on track to open a record total of 60 properties this year.
Grismer noted that the company’s strong financials are boosting its prospects for more acquisitions. “Our balance sheet provides us with a strong liquidity position allowing us to thoughtfully pursue our growth objectives while returning capital to shareholders,” Grismer said. “We believe this is a key competitive advantage as we head into a period where we expect to see increasing acquisition opportunities.”
When asked if Hyatt would consider apply some of the funding it used to buy the Thompson Miami Beach toward more purchases, Hoplamazian said, “We’re seeing opportunities broadly. But we’re not commenting on specific sources or properties we happen to be looking at.”
Adding to the Unbound Collection by Hyatt
Could Hyatt be eyeing some new properties — or businesses — to complement its new soft brand?
The Thompson Miami Beach acquisition and its subsequent conversion to The Confidante demonstrated Hyatt’s commitment to growing its newest brand, the Unbound Collection by Hyatt, a soft brand collection of what Hoplamazian described as offering “powerful and distinct experiences” and being more of a “collection of stays, focused on the types of experiences and occasions of a stay more so than the property of the particular type of product.”
When Skift interviewed Hyatt CMO Maryam Banikarim about the Unbound Collection in March, she hinted that the Unbound Collection could include non-hotel products such as river cruising and alternative accommodations.
Last year, Hyatt did invest some money in Onefinestay, a luxury vacation rental platform, during a $40 million investor funding round. The London-based company worked with Hyatt on a pilot that allowed some of its guests to use the Hyatt Regency London – The Churchill while they wait to check into their Onefinestay rental.
In April, however, after Onefinestay had been entertaining purchase offers, it announced that AccorHotels would purchase the alternative accommodations provider for $168 million, effectively ending Hyatt’s partnership with Onefinestay — and dashing Hyatt’s potential hopes for acquiring it.
Nevertheless, if Hoplamazian’s remarks and the company’s recent history have shown, this is a hotel company that isn’t afraid to invest and to experiment, so we can expect to see some interesting sales and acquisitions from Hyatt in the year ahead.
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Photo credit: The newest addition to the Unbound Collection by Hyatt is the former Thompson Miami Beach, which Hyatt bought for $238 million. Chris Sanders / Hyatt Hotels Corporation