U.S. hotel companies like Hyatt may not get the best financial deals when they look to expand in Asia, but the growth opportunities are too great to ignore — especially when properties are only more and more expensive to build in the U.S. What's behind Hyatt's decision to go another way?
The leaders of many of the world’s largest hotel companies have rallied in recent months around the idea the biggest rate of growth for hotels in coming years would be across Asia rather than the U.S.
Data already supports the idea: There are 622,218 rooms in the U.S. development pipeline compared to 656,828 rooms in China, according to Lodging Econometrics.
But Hyatt CEO Mark Hoplamazian sees more franchise growth opportunities for his company across the U.S., Europe, and South America rather than Asia.
“I would say Asia is trailing all of that by a wide margin because it's just not a very penetrable franchise market,” Hoplamazian said last week at the Goldman Sachs Travel and Leisure Conference.
Hyatt isn’t writing off Asia or China. The company had a 35,000-room development pipeline in China at the end of 2020, which was larger than the 24,000-room pipeline in the U.S.
In fact, Hyatt views China as a bit of a guide for how the rest of its portfolio can recover from the pandemic.
Hyatt’s business travel demand in China is about 80 percent of 2019 levels compared to the 35 percent seen in the U.S., Hoplamazian said.
The Chicago-based hotel company has development partnerships with Homeinns Hotel Group and Tianfu Minyoun Hospitality to bring more Hyatt-branded properties across the country. But those partnerships aren’t enough for Hyatt to crack the top five brands leading a bulk of the hotel growth across China.
Hilton leads the way, with 601 hotels and 116,446 rooms in various stages of development in China. IHG Hotels & Resorts comes in second for property volume w