Hyatt Pursues Standard Hotels: What's Behind the Luxury Lifestyle Play

Hyatt is reportedly near to closing a transaction with Standard International, owner of the luxury lifestyle brand The Standard and other brands.

What's behind the potential deal? The Standard is part of a category of hotels that Hyatt and all major hotel groups increasingly covet. While a typical hotel is just a place to sleep, "luxury lifestyle" hotels are boutique-like places where the lobby looks like a modern art gallery and the rooftop bar serves drinks with names you can't pronounce.

Hyatt CEO Mark Hoplamazian has previously told investors that adding luxury and lifestyle brands can create a "network effect," driving loyalty program growth and engagement.

This network effect works out roughly this way: The more fancy hotels an operator has, the more well-to-do people want to stay there and book directly.

Hyatt's Gains in Luxury and Lifestyle

Over the past six years, Hyatt has doubled the company's number of luxury hotels and quintupled the number of high-end lifestyle resorts.

Hyatt said a year ago that roughly 45% of its portfolio was "luxury, lifestyle or resort."

Hoplamazian believes Hyatt's strength in luxury and lifestyle helps it stand apart from competitors and attract developers and owners. It hopes this will build a self-sustaining momentum in deal flow, adding luxury and lifestyle properties at an increasing pace and stealing deals for independent hotel conversions away from rivals.

The CEO has noted in talks with investors that Hyatt's growth in revenue per available room, a key industry metric, has been driven by its higher-end customer base. These travelers haven't been impacted by inflation or higher interest rates, broadly speaking, thanks to a broader "wealth gap" appearing in U.S. travel.

So luxury and lifestyle properties typically generate higher fees per room for Hyatt.

Another side benefit: People who like luxury lifestyle properties will tend to sign up for Hyatt's loyalty program. Members of loyalty programs disproportionately book directly, which means more money for Hyatt than travelers booking through online travel agencies.

Hyatt's Luxury and Lifestyle Shopping Spree

Hoplamazian has said his team is looking for acquisitions and related opportunities that either grow their existing high-end customer base or expand to similar demographic profiles.

A case in point: Hyatt closed its acquisition of the lifestyle brand Dream Hotels last year for $125 million in cash. The goal was to target Dream's customer base — typically 20 years younger but financially similar to Hyatt's existing base. The deal added about 1,700 rooms to Hyatt’s lifestyle portfolio.

Last year, Hyatt bought the boutique hotel booking site Mr and Mrs Smith for £58 million in cash (about $72 million at the time). In April 2024, it began letting members of its loyalty program book at about 700 boutique hotels and villas vetted by the site, with plans to add more listings.

Back in 2018, Hyatt grabbed lifestyle group Two Roads Hospitality, for $408 million, adding about 85 properties.

Now, there are reports that it may want to enter into a transaction with Standard International. When asked, a Hyatt spokesperson said, "As a matter of policy, we don’t comment on questions of this nature. We remain committed to asset-light growth through both organic growth and strategic acquisitions but have nothing new to share at this time."

If it does pursue some kind of deal structure, that might fit a broader strategy, in light of the company's past statements and actions.

"If I could synopsize at a very high level what the core premise of our strategy is, it is that every stakeholder — that is our colleagues, our guests, our customers, corporate customers, and our hotel owners — all seek to increase their engagement with Hyatt," Hoplamazian has told investors.

Hyatt isn't alone in luxury and lifestyle

• In the U.S., developers and hotel groups were on track to open nearly 60,000 branded lifestyle and soft-branded boutique hotels between mid-2023 and 2027, according to an analysis by The Highland Group of CoStar’s STR data.

• Hilton this year acquired NoMad Hotels, a tiny brand of luxury lifestyle hotels, and Graduate Hotels, a collection of about 30 college-themed lifestyle properties near universities.

• Marriott opened its 500^th luxury property last year and has roughly 25 luxury properties expected to open in 2024.

• IHG's luxury and lifestyle portfolio represents roughly 13% of all IHG rooms and roughly 21% of its pipeline. If it only opened that pipeline, without signing any more hotel deals, it would increase that luxury lifestyle distribution worldwide by roughly half.

• Accor plans to open 100 luxury and lifestyle hotels by 2025, with plans to sign at least 50 more projects per year.

• In the U.S., lifestyle hotels account for about one out of every three open U.S. branded hotels, a jump of 26.3 percentage points of share since 2000, according to a report from brokerage firm JLL this year. The firm forecasted that the market share of branded lifestyle hotels will speed up thanks to growing demand.

Accommodations Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of hotels and short-term rental sector stocks within the ST200. The index includes companies publicly traded across global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.

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