How Hyatt Plans to Leverage Newly Acquired Apple Leisure for Global Growth

Earnings season is just around the corner for hotels, and the publicly traded companies are keeping most growth figures quiet until they report. 

But Hyatt is already signaling how it will use a recent acquisition on top of organic growth of its historic brands to beef up its portfolio.  

The Chicago-based company’s $2.7 billion acquisition of Apple Leisure Group, which closed in November, doubled Hyatt’s resort portfolio and expanded its European footprint by 60 percent. The push into Europe seemed out of step with the industry at the time of its announcement last year, as it arrived at the time competitors like Hilton were touting Asia as their growth target. But Hyatt’s focus on Europe as well as a planned Americas expansion link up with industry expectations both regions will end up recovering faster over the next year.

“What we have now is the ability to get into a marketplace that has predominantly been led by local and regional brands,” Jim Chu, Hyatt’s executive vice president of global franchising and development, said specifically of Spain in an interview with Skift. “We can come in and have an immediate quality of resort experience getting into one of the largest markets [and] catering towards a customer that already looks similar to ours from a demographic perspective.”

Beefing Up the Portfolio: Hyatt had more than 1,000 hotels at the end of the third quarter last year, and the Apple Leisure Group deal added another 96. The Chicago-based hotel company is growing faster than its competitive set: Hyatt’s nearly 7 percent net rooms growth in the third quarter was faster than the 6.6 percent seen at Hilton and the negligible growth for the same period at IHG Hotels & Resorts. 

But its recent growth spurt is also providing some catch up. Hyatt still wasn’t in the top three of franchise companies leading the charge of the U.S. construction pipeline at the end of last year, according to Lodging Econometrics.  

The company is significantly expanding its Hyatt Place and Hyatt House portfolios, both upscale brands that are in a similar upscale category as Marriott’s Courtyard brand. Some of that expansion is aggressive: The company hasn’t had a presence in downtown Memphis since the 1980s, and it is now parking three of its brands — the lifestyle-oriented Caption and Centric brands as well as a Grand Hyatt — within the same development. 

Chu indicated he would be disappointed if the Hyatt Place brand didn’t eventually swell to 1,000 hotels, a notable figure given that’s about the size of the entire company’s portfolio at the end of the third quarter last year.

Hyatt’s take on lifestyle hotels differed from its competitors that typically only popped them up in the world’s largest cities. Hyatt is bringing some of these hotels — with brands like Thompson and JdV — to Austin and Denver. The company already operated in other smaller cities like Nashville and Savannah. 

“Just like people like rooftops in New York, people like rooftops in Nashville, and people like rooftops in Memphis,” Chu said. “It’s the same type of experience in a different marketplace.”

Avoiding Brand Glut: The Apple Leisure deal suddenly puts Hyatt in brand territory that industry analysts like to gripe about a lot — that there are way too many hotel brands. Pre-Apple Leisure takeover, Hyatt had 20 brands relative to the roughly 30 at Marriott and 40 at Accor. 

But now the company is integrating six more brands under Apple Leisure’s AMR Collection of all-inclusive resorts. It’s still possible to maintain brand integrity while folding in an additional six, Chu said, because the growth is going to be selective.

Hyatt’s strategy at keeping its new all-inclusive brands distinct is by having them only work in the all-inclusive space. Remember: companies like Marriott and Hilton are relying on brands that aren’t exclusive to the all-inclusive resort sector in their respective expansion strategies.

“[The AMR Collection of hotels] are really designed for this package experience; whereas, others are, I find, a bit more confusing,” Chu said. “We’re not sitting there saying, ‘Hey, by the way, this Hyatt Regency is all-inclusive, and this one’s not.”

The Big 3 of U.S. Hotel Growth

The U.S. construction pipeline isn’t showing much change in the way of what companies dominate the development pipeline. Marriott, Hilton, and IHG Hotels & Resorts, respectively, topped the construction pipeline at the end of 2021, according to Lodging Econometrics. 

Marriott led the way with 170,586 rooms under construction across 1,345 hotels. Hilton came in second, with 141,053 rooms across 1,239 hotels. IHG rounded out the top three with 76,987 rooms across 761 projects. The three companies comprised nearly 70 percent of the total number of U.S. hotels under construction at the end of 2021 and 67 percent of the guest rooms. 

What’s most notable of the figures is how Hilton’s 689 hotels in the early planning stages of development at the end of last year was a record high for the company in the U.S. That would seem to go against a forecast last year by company CEO Christopher Nassetta: 

“I suspect you will see a cycle where, particularly in the U.S., the new construction numbers are going to be much, much lower,” Nassetta said on an investor call last May. “That’s obviously long-term healthy for the industry. But the good news for us is the world’s a big place, and the pressures are not the same in all places in the world, particularly recognizing that the place where we have the second-biggest chunk of our growth is Asia.”

Blackstone’s “Well, Duh” Quip on Fourth Quarter Earnings

Fourth quarter earnings reports are beginning to trickle out. While we’re a few weeks out from the traditional hotel companies reporting, Blackstone — a major investor in hospitality — went last week. Executives at the firm were surprisingly mum on the recent reports they were linking up again with Starwood Capital Group on more extended-stay hotels. 

There were also no mentions of its focus on Las Vegas resorts, but Jon Gray — Blackstone’s president and chief operating officer — did manage to say what just about everyone in travel is telling themselves with each passing variant. 

“We’ve been focused on leisure and all forms of travel, and we’ve done this in real estate, but also in private equity,” Gray said. “And what we’re anticipating there thematically is a big recovery of travel as we come out of COVID.”