Hyatt and other hotels are increasingly in the business of opening their doors to all who need a place to sleep, as long as they pack a peaceful and inclusive attitude with them.
Hyatt Hotels CEO Mark Hoplamazian said Thursday that there’s no place for hate groups at any Hyatt properties.
“If a group is primarily focused on disparaging a group by virtue of their identity…that’s really where we need to draw the line. We’re going to apply our values to making these decisions along the way,” Hoplamazian said during Skift Global Forum in New York City.
The move follows similar stances by other hospitality groups. Hyatt’s decision to ban hate groups follows criticism the company received over the summer for agreeing to host an anti-Muslim hate group at one of its properties in suburban, Washington, D.C.
Hoplamazian sent a memo to Hyatt employees on Thursday morning explaining the policy change, emphasizing that values such as inclusiveness and empathy “are deeply personal to me.” Still, Hoplamazian said these groups don’t represent a significant amount of total business. “It’s actually quite infrequent,” he said.
Along those lines, Hoplamazian and other hotel and travel CEOs met with President Donald Trump and his staff earlier this month to convey the importance of portraying a welcoming message to international travelers visiting the United States.
“The purpose of the visit was to focus on things that we’re trying to promote as an industry,” said Hoplamazian. “We talked about extending a message of warm welcome to the rest of the world which we feel is critical. Our pitch is that that’s actually most effective when it comes from the top. We didn’t get any commitments on that but we think we made our case.”
Hoplamazian also said the visa waiver program was discussed during the White House meeting. “We were able to get a commitment to go back and look at policies in place that could expand the freedom to travel.”
NH Hotels Upset
Hyatt tried to buy Spain-based NH Hotels earlier this year but the bid failed. “NH also had a number of hotels that operated at the higher end as well,” said Hoplamazian. “The core of their business is what we’d describe as upscale and select service.”
Hoplamazian isn’t letting the failed bid distract him and his team from potential future acquisition and expansion. “Organizationally, there are so many intersections of loyalty, distribution, revenue management, and sales,” he said. “In our case, we also have a significant effort around wellbeing. Having all of those functions under one leadership team was a critical step forward to increase our agility. We launched a new credit card. We also launched a digital experience platform called Find available through our World of Hyatt platform.”
Hyatt is interested in buying brands that are unique and have real brand equity, said Hoplamazian. “These will be asset light in terms of what we focus on,” he said. “There are other places in South America where I’d love to grow faster. Asia has a special focus.”
There’s also a tremendous level of demand for wellbeing offering, which Hyatt is looking to sink its teeth into more in the coming years. “We’re currently working on pilots for meeting planners to allow their meetings to be more effective,” said Hoplamazian. “These will be unique programming because we have experts that have been doing this for decades. These will allow you to have a fundamentally different experience that won’t just be a different breakfast scheme.”
These new wellness offerings will be available to World of Hyatt loyalty members, and Hyatt is starting a 6,000-person pilot focused on well-being practices. “How do we increase relevancy and frequency?” said Hoplamazian.
“Don’t look through the lens specifically as being a hotel company. Our holistic sense of wellbeing was really a big part of that,” he added. “A lot of companies are turning to mindful practices to help people be healthier. We’re looking to try to embed a mindful approach to nutrition, exercise, and mental well-being as well.”
Read Full Edited Transcript of Interview
Skift: This morning you sent a memo to your whole team that you will stop accepting hate groups at your hotels. Can you explain why you did that and what that means for the business?
Mark Hoplamazian: Well, hotels are open forums for many types of groups and so over our 60-year period we’ve had many different types of groups that have convened meetings in our hotels. As we have reflected a lot on our values and our purpose as a company, which is to care for people so they can be their best, we really started to reflect and revisit many things that we’re doing within the company to make sure that we continue to reinforce our purpose and be able to put us in a position to fulfill our purpose. And also to really make sure that we’re doing things that are going to allow our colleagues, and other guests, and other people that are in our hotels to be their best.
Today is UN World Tourism Day and the values around that are about gaining an understanding of the world through travel and that means really being in a position where you feel that your position and your identity is respected. And so groups that are primarily focused on demeaning and disparaging other people don’t align with our purpose.
Skift: And how do you figure that part out?
Hoplamazian: It is a complex evaluation. There’s no question about it because one group that might be disfavored by someone, someone else might champion. But really at the core of it, it’s if a group is primarily focused on disparaging another group by virtue of their identity, by virtue of their immutable characteristics, whether that’s your sexual orientation, or your race, or your religion, that’s really where we need to draw the line.
And it’s going to be a complex equation, we’re not going to be perfect about it. I’m sure we will make mistakes over time, but we are going to apply ourselves to it and we’re going to apply our values in making those decisions along the way.
Skift: What if the owner of the hotels, because you’re an asset-light company increasingly, or the management company, etc, pushback?
Hoplamazian: I think the fact is that as we look at it holistically, we want to make sure that the environment we’re creating within our hotels is one in which our colleagues, first and foremost, and others who are there feel safe. Not just physically safe, but emotionally safe and psychologically safe. That will promote great business over time and I think it will put us in a position to do better and better, and I would also just point out that these groups don’t represent a particularly significant amount of total business. It’s not as though we’re having these things confront us all the time. It’s actually quite infrequent.
Skift: So the challenge that for instance, platforms like Facebook and others are facing, you are facing in real life?
Skift: Speaking of hatred, you met President Trump recently as part of US Travel Association’s White House meeting a few weeks ago. Did you hear anything that assures you in any possible way?
Hoplamazian: The purpose of the visit was really to focus on things that we’re trying to promote as an industry. Specifically, from a U.S. perspective, that means extending a message of a warm welcome to the rest of the world. Which we feel is critical and our pitch was that actually, it’s most effective when it comes from the top, and we didn’t get any commitments on that point, but I think we stated our case.
The second thing we talked about was the freedom of travel and we reviewed the incredibly positive impact that things like the Visa Waiver Program have generated. I mean, significant increases in travel from countries where we have actually linked up and had a Visa Waiver Program put into place. And we cited those statistics to try to illustrate the exportation value of travel because people coming to the US and spending money is the most direct form of export you can have. I think there’s been re-emphasis about actually turning back to some of these things that have not really advanced since this administration’s been in office.
We did make significant progress in reducing the number of days it takes for Chinese, Indian, and Brazilian travelers, those three countries, in particular, were significantly backed up. They went from several months to several days. But we feel like that we need to actually refocus attention on it because right now, so much of the general dialogue is around trade things that are missing the point with respect to travel in particular. And so we believe that some refocusing was really necessary. We had Larry Kudlow in the meeting, a member of the chief of staff’s team, as well as Ivanka Trump and I think we were able to get through to a commitment for them to go back and take a look at policies that are in place that they could actually do something that will free up travel. We’ll see how it evolves, but we feel like we need to go and continue to advocate for this. This is really important to the industry.
Skift: About 80 percent of your portfolio is the U.S., and 80 percent of your revenues are in the U.S. Are you seeing any effect in the past two years?
Hoplamazian: All of the data, especially for this year, has shown an increase in inbound travel. Of course, there are always considerations that you have to take into account, like currency changes, but we don’t see any negative impact with respect to inbound foreign travel at this point.
Skift: Let’s get into some of the business aspects of Hyatt. So you’ve done a lot in the last year to restructure the company. You have consolidated a lot of things under the chief commercial officer. You hired a new chief digital officer. You just hired a chief wellness officer as well. And you bought Miraval, you bought Exhale, and you tried to buy NH. What is happening?
Hoplamazian: A lot, obviously. So a couple things. One, organizationally there are so many intersections across the areas that you cited, loyalty distribution, revenue management, sales, and in our case we also have a significant effort around wellbeing, and the intersection of all of those things has to do with how we are engaging with, and how we are interacting with, and how we are presenting ourselves to our guests. And so having all of those functions under one leadership team was really a critical step forward to increase our speed of reaction and increase our agility.
So we stood up a number of things in the space of a very short period of time. We launched a new credit card. We launched a partnership with Small Luxury Hotels to link to our loyalty program, adding over 500 hotels that are mostly in Europe into people’s selections. We also launched a digital experience platform called FIND, which is very highly focused on wellbeing offerings. FIND is available through the World of Hyatt platform, which is our loyalty program.
And we’ve also launched some initiatives on the sales side, mostly in the luxury space highly focusing on luxury travel advisors. And so when you look at each one of those things, they kind of make sense in their own domain, but when you have the ability to link them across, there’s a lot more power to it. But we were able to stand all these things up in very short order and part of the design of the organization was increase the speed to market. We’ve got to move faster.
Skift: And so the larger vision of Hyatt moving beyond hotels is what?
Hoplamazian: So first you have to start with purpose. I mentioned earlier that we’re really focused on caring for people so they can be their best. We are serving and focused on the high-end traveler. We are not playing every segment down to midscale and economy.
Skift: But wasn’t that what you were going to do with NH if you were successful?
Hoplamazian: I think NH had a different proposition associated with it that had more to do with the geography.
Skift: That Hyatt is not as strong in Europe?
Hoplamazian: Correct. But they also had a number of hotels that operate at the higher end as well. But yes, the core of their businesses is more what we would describe as maybe upscale or select service. We actually do participate in the select-service segment. So first and foremost, the lens that we’re looking through is who’s our customer and what are we going to be doing for them. The idea behind World of Hyatt was we want to engage our guests and our customers, our travel planners, and travel advisors, we want to engage them in ways that are highly relevant to them.
So for a hotel company, the frequency of staying with us and interacting with our brand is relatively low for most people. So how do you increase relevancy and frequency? Well, the answer is you don’t strictly look through the lens of being a hotel company. You look through the lens of what your customers are looking for and make sure that you can actually deliver something that’s really unique and compelling, and that’s really what led us to wellbeing. For us, it’s a perfect way to fulfill a purpose because in order to have someone be their best, they have to be their best selves, and a holistic sense of wellbeing was really the core to that. Within wellbeing which is a broad category, we chose a couple of platforms that all of the programming that they do is informed by mindfulness. That’s a subspace, if you will, that we think is pretty much wide open at this point.
A lot of companies are turning to mindful practices to help people be better centered, more effective, more productive, and healthier as well. There are health outcomes that are clear. So we’re looking to try to embed a mindful approach to nutrition, to exercise, to meditation, and mental wellbeing as well. And we’re doing that in many different dimensions, including some significant at scale pilots for our colleagues. We’re starting a 6,000 person pilot now that is focused around holistic wellbeing and mindful practices.
Skift: So a year into Miraval, what are the early lessons?
Hoplamazian: First, we believe that there’s a tremendous level of demand for wellbeing offerings and so our resort in Tucson, which we have expanded, has seen tremendous demand levels. The way I think about Miraval is there are about 95 offerings when you show up on-property, and so honestly, what you’re paying for your room is a small proportion of what your total experience is about. Because there are so many different offerings and some of it is to allow you to challenge yourself. Some of it is to celebrate your physical wellbeing if you’re in that mode. Some of it is to recover from a life event, but there are many different dimensions of how you can do that and discovering that path on your own is really what we’re there to facilitate. But the demand level has been phenomenal.
We’re opening a new Miraval in Austin in a couple of months and then mid year next year we’ll open a new one in The Berkshires in Lenox, Massachusetts. But more than that, we’ve really tapped the experts and the expertise within Miraval to pull mindfulness into offerings within Hyatt, and we’re starting with our colleagues to make sure we help them be their best. But we also are working right now on some pilots for meetings to help meeting planners and our corporate customers to be able to embed some programming. That really will allow their meetings to be that much more effective and it’ll be unique programming because we have experts who have been doing this for decades. So that’s what I’m really excited about. I think we can really elevate the whole experience and have a fundamentally different type of experience that’s not just a different breakfast buffet, or a different lighting scheme.
Skift: So you have some cash to put it to work. NH didn’t work out. What will you buy? What are the types of things you care for now? I know China has been a big focus for you. About 20 percent of your revenues are outside the U.S., very small compared to I’m sure what you want. What are you looking at?
Hoplamazian: So a couple of clear areas. First of all, as I mentioned before, we participate between upscale and luxury, and so within that range of segments, we would be thrilled to add some additional brands if they are unique and have real brand equity associated with them. We are focused on buying brands and brand platforms as opposed to more real estate assets. So it will be asset light in terms of what we focus on.
Asia continues to be an area of high focus for us. By the way, six years ago when you decided to launch into this industry you chose beautifully because, over that period of time, travel has grown at about one and a half times the rate of GDP around the world. But in Asia, it’s more like twice the rate of GDP growth. This is the place to be and so we think Asia continues to be critically important and we’re focused on geographies where we have relatively lighter representation. Europe is one of those areas that hence our interest in NH, and there are other places in South America where I would love to grow faster. So it’s about experiences and brands that serve our customer base, higher-end customer base.
Skift: Let’s talk about your China strategy. Where are you with that? What are the brands you’re going in with?
Hoplamazian: We have tremendous growth already in place in China. We have 60 hotels open and operating and we’ll double that over the next four years. So we have every one of our 10 hotel brands represented in China other than our all-inclusive brands. But we believe that all-inclusive can work in China in certain markets. So we have Hyatt Ziva and Hyatt Zilara that are our two all-inclusive brands, so the growth itself is significant. Hyatt Place and Hyatt House, which are our select service offerings at a lower price point, I think will have tremendous growth potential because we can open those in many more markets.
But we’re also looking to potential additional ways in which we can grow both faster and more effectively with local partners. We struck a partnership with a local group in Chengdu called Minyoun Hospitality and we’re doing a number of Hyatt Place and Hyatt House developments with them. And we’re working on a couple of other really interesting potential alignments and partnerships with local players, both in relation to hotel offerings but also a way in which we can enhance our digital engagement with our customers in China, which is a whole different world.
Skift: Let’s dig into the all-inclusive resort because you mentioned that. So you’ve been doing all-inclusive for years and other brands are getting into it as well. How do you see the all inclusive resort expanding?
Hoplamazian: I think it remains a very popular format for a lot of travelers, especially in certain resort locations. In order for it to work, you have to have relatively close access to a relatively large airport because you have to have volumes of people that come through. And they have to be of a certain size because if you’re going to have someone on property experiencing the offerings of that property over a four or five-day period, you need multiple outlets. Multiple restaurants, multiple things to do, and in order to do that you have to have enough people to really populate that and have it work. So the resorts tend to be relatively larger, more than 500 rooms. And there are many markets like that in the Caribbean and in Mexico which is really where we’re concentrated currently.
But it’s also true that if you look in the south of Spain, or the northern coast of Africa, or just starting now in India, and we believe just starting in Asia as well such as Thailand and China.
Skift: You know who you should buy? Six Senses would be a good one.
Hoplamazian: I didn’t realize I was going to get M&A advice when I came, so that’s really good.
Skift: As you’re thinking about Asia, because of all-inclusive, obviously they’re big in it on the luxury end of the things. Asia has had struggles with home-sharing, and you have had a couple of goes at it. You invested in what was Onefinestay initially but took the write down. It sold to Accor, not for a lot.
Hoplamazian: We didn’t take a write down, we got our money back. Accor took the write down, not us.
Skift: Okay. But you just did a $22 million charge, you invested in Oasis. What’s missing in your portfolio?
Hoplamazian: First of all, what isn’t missing is the demand for alternatives to hotels for certain purposes of visit or state occasions, and so we see in our own customer base a real demand for the home option in many cases, which is why we’re still drawn to the space. The fact is that subsequent to the time that we invested in Oasis, the regulatory environment changed pretty significantly. There’s been a wave of new legislation and new regulations that have been put into place in so many markets across the United States.
Skift: That doesn’t seem to be hurting Airbnb.
Hoplamazian: I’m not sure that that’s true. I would say I think there’s been a documented decline in their inventory in a few key markets and the real impact that legislation is going to have, I think a bigger impact in New York, takes hold in 2019. And I think it’s going to be significant and so I think that there’s an evolution of what’s going on with these platforms.
I think for companies that have focused on control, whether that’s by way of lease or ownership of their inventory, they have a basis on which they can actually take their model forward. It’s harder to scale that and more expensive to scale that, but you do have a direct control over the product that you’re ultimately offering, and so I do think that there’s likely to be additional consolidation among platforms that do not have control over their inventory. And so we’ll see how this goes. I think a year ago people thought trees grow to the sky and there is no limit. Airbnb will be worth $300 billion in two years time, etc. So I just think that there is a reality that’s coming to roost here and a new legislative environment.
On the B2B side, Oasis has about half of their business on the B2B front and on the B2C side. We see more opportunity on the B2C side and we’re going to continue to work on this until we figure out a model that can work for us.
Skift: Let’s move on to cancellation policies at hotels. They are changing quite a bit, from 24 to 48 hours. Where do you see that going?
Hoplamazian: I think the market really is now at 48 hours. We made that change early this year, except for our elite members of World of Hyatt. They still have a 24 hour policy available to them. The fact is that there is just a higher level of demand period. Occupancies are at record levels and so in order to avoid the disruption that comes from last minute cancellations, hotels when they are able to will extend their cancellation policies. We had a large number of hotels, like 40 percent of our hotels in North America that had already extended to 48 hours or longer.
So we have a number of resorts, for example, that have 72 hour policies, because the disruption from last minute cancellations when you’ve got embedded demand or available demand is significant. The change is driven by a supply and demand reality, but I think that that’s where it will stay.
Skift: So let’s quickly jump into meetings and then corporate travel. So on the meeting side, there’s also a bunch of movement where commissions are coming down. Some of the hotel groups, Marriott I think was at the forefront of it. What is your policy?
Hoplamazian: Right now we’ve maintained our commission structure with our partners. We continue to evaluate how things are evolving.
Skift: So when is that announcement?
Hoplamazian: Remains to be seen. I mean, we’ve been closely keeping tabs on how this has evolved and how business has shifted or not over the course of the year. We live in an economic reality and so I think the answer is we’re not looking at this strictly from a cost perspective. We’re looking at this from a total result perspective that is revenue and cost and we have excellent relationships with a lot of people who are great partners, intermediaries and travel managers. And so what we want to do is continue to work with them to see if there’s a differentiated way in which we can actually compete with them. So we’ll see.
Skift: You launched a small business offering as well. What’s the thought there going direct to small businesses?
Hoplamazian: I think the answer is that there’s so many. First of all, the meetings business in hotels has continued to become more specialized in the main. Yes, there are still the market-wide conventions and big gatherings that happen from time to time, but the average size of meetings has actually shrunk. If you look at the pharma business, when I started in the industry 12 years ago, the pharma business was just then moving out of primary care physician sales forces of 5,000 to 6,000 people into specialty sales forces of 500 to 600 people. That’s a really different meeting, right? And that’s true for lots and lots of meetings that are happening at our hotels. So the idea of actually gaining direct access to small and medium size businesses in meeting their needs in a different way directly makes a lot of sense to us because that’s really where the core of the market is.
Skift: Okay, let’s take some questions from the audience. The first one is what technologies do you believe are impacting the hotel industry most and how is Hyatt embracing it?
Hoplamazian: So technology to us is back to our purpose, a way to scale care and we’re focusing on how to make life easier for our colleagues to be able to engage with guests. So taking friction out and simplifying the interface is one of the biggest advances. The second is really amping up our digital capabilities in relation to guest requests, because right now we have deployed within our app the ability to make requests of any kind and have a direct contact with someone on-property as you choose through SMS or within the app. And this really has facilitated faster service but also a much better experience. So those are the two things I would say. Facilitating colleague experience and facilitating guest requests are the two big ones.
Skift: Azeem asks, how do you compete with the new Marriott from a loyalty standpoint given the reality of its size compared to Hyatt?
Hoplamazian: So our view is we’re not trying to sort of be the points program of all points programs. We’re trying to actually be an engagement platform that’s meaningful to people. So that’s really why we’re extending into areas that are beyond the four walls of just hotel stays, and so we’re trying to really increase our relevance. It means a deeper understanding of our guests and what they’re looking for and that’s really how we’re going to focus our attention. I would only also offer that in a number of markets, we have very broad representation at Hyatt, but we don’t necessarily have layers and layers of representation in every market.
So you might pick, there’s a Midwestern market that will go unnamed, a secondary or tertiary market, we have two properties in that market and Marriott’s got over 20 and the question that we ask ourselves is, “Is it really important to have 20 properties in a very small market?” I think there’s a proliferation strategy versus a relevancy and minimally viable presence and that’s really how we focused our attention.
Skift: Mark asks how is Hyatt positioning itself to the high-end hotels guests in the wake of Starwood becoming a part of Marriott?
Hoplamazian: I think we’re the sole remaining multi-brand, multinational hotel company that’s hyper-focused on the high end traveler. We are it. Starwood shared that position before they were acquired by Marriott, but I think now you’ve got the relatively larger hotel companies, Marriott, Hilton, IHG, Accor that are really spanning across a very wide range of guests and we’re not. All of our guests focus is at the higher end and really the way we’re going to compete is not to try to play the scale game that they’re playing because getting on their playing field doesn’t make any sense for us.
Now, if you somehow magically zap me into Arne Sorenson’s body and said, “Now you’re running Marriott,” I’m not sure I would run it differently than he is, but we think that differentiation through the experience, and hyper-focusing on getting to know our higher end guests better, and extending the brand is really the way to win and it’s been working. Our results have actually been remarkable. I’m particularly elated because after the Marriott-Starwood merger, a lot of the sell side analysts on Wall Street said, “Oh, there’s only one thing that matters in this industry and that’s scale,” and we’re proving them wrong. I’m very happy to be able to prove them wrong.
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Photo credit: Hyatt Hotels CEO Mark Hoplamazian (right) and Skift founder and CEO Rafat Ali speaking on stage at Skift Global Forum in New York City on September 27, 2018. Matt Mateiescu / Skift