After Buying Comes Hard Selling as Hyatt Works to Deploy Acquired Brands in Asia
Above, Thompson Madrid opened in September, marking the brand’s debut in Spain. Hyatt’s global growth officer Jim Chu eyes an Asian city next for Thompson
By Raini Hamdi, 12 Dec 2022
Hyatt Hotels has been on a strategic shopping spree since 2017 and announced yet another acquisition, Dream Hotel Group, recently. It is now eager to show off the goods to Asian hotel owners, in particular US brands such as Thompson Hotels, Hyatt Ziva and Hyatt Zilara. Doubtless Asia will also see a reinvigorated Dream expansion in the region after the deal is completed in the coming months.
But having more brands is one thing, executing their development is another. Dream was a good example. Although renowned for F&B and entertainment in its hometown, the group didn’t go far in expanding in Asia and closed its regional office in 2019 (read the author’s article on this here.)
Now Dream, Thompson and a string of other brands may count on Hyatt’s infrastructure and people on the ground in Asia to effect faster growth. Hyatt is entrenched in Asia-Pacific, with a highly respected and experienced president of growth and operations Asia-Pacific, Stephen Ho, in Hong Kong.
Nevertheless, getting Asian owners to be aware of and understand the new World of Hyatt, with 26 brands (excluding Dream acquisition, see chart below), or convincing these investors of the potential of new segments such as luxury all-inclusive, are among challenges, although not insurmountable.
Thompson, for instance, prides itself as “a true original,” which is a bit superfluous and ambiguous for Asian owners to understand at once. The brand debuted on the cobblestone streets of SoHo, New York City some 20 years ago and came under Hyatt through the chain’s acquisition of Two Roads Hospitality in 2018, which also included Alila, Destination, JDV and Tommie. The latter does not appear anymore in Hyatt’s brand portfolio.
Thompson is one of the brands that Hyatt is eager to introduce to Asia, along with all-inclusive flags such as Hyatt Ziva and Hyatt Zilara, said the chain’s Chicago-based executive vice president and chief growth officer, Jim Chu, in an interview with Hotels-Asia during the recent Hotel Investment Conference Asia-Pacific in Singapore.
Yet for Asian hotel investors and consumers, the “true original” may well be the good old Hyatt Regency.
“In Asia-Pacific, the number one brand from a growth perspective is Hyatt Regency,” said Chu. “It may not be the hotel that people call out as their favorite but it has a really broad offering. It resonates with leisure, corporate and MICE [meetings, incentives, conventions & exhibitions]. It can be applied to urban developments but also resorts. There is some flexibility [unlike brands with fixed standards] that gives it adaptability.”
Hyatt Regency is the bedrock of the chain’s expansion in the region. The first Hyatt Regency hotel outside the US opened in Hong Kong in 1969, just two years after the opening of the first-ever Hyatt Regency in Atlanta.
But the World of Hyatt is now at its most more colorful and diverse since founding 60 years ago. The last five years were a defining period that strengthened Hyatt”s footprint and transformed its offering. Its acquisition of the Miraval Group, Two Roads, Apple Leisure Group and Dream shows its ferocity to lean in on current trends such as wellness, lifestyle and all-inclusive, as competitors have. Apple Leisure, an all-inclusive player, is a particularly prescient buy, as can be seen in the insatiable demand for leisure travel post pandemic.
More Brands for Management Deals
In Asia, only eight percent of Hyatt’s portfolio is franchising and almost all of it is in China, said Chu (pictured above), adding that management remains Hyatt’s focus in Asia, especially with more brands in the pocket. Moreover, nearly 70 percent of Hyatt’s portfolio is luxury and upper upscale, which lends itself to management rather than franchise.
“We’ll continue to be a great manager. It’s the core of our business and it’s why we acquire companies,” he said.
“We have the ability to put key brands in specific markets. We’re bringing Thompson into Asia because we know there is a great connection between millennial travelers and lifestyle hotels. Thompson has great programming and would resonate with this group.”
On all-inclusive, Chu recognized the segment is still nascent in Asia, but sees opportunities in resort destinations with airlift.
“To put the right programming in place, we need high volumes,” he said, singling out Vietnam, Thailand and China as potential destinations. “We also need to tailor the offering. In Sanya, China, for example, the customer is solely Chinese. So we need to ensure the F&B, program, et cetera, is tailored towards the Chinese customer, not just transplant what’s successful in Jamaica or the Dominican Republic into Asia.
“We’re exploring all this. We’re not going to boil the ocean and do it fast, because we want to get it right.”
But Hyatt may need to stew the ocean if not boil it, as competitors are already swimming in on all-inclusive. Competitor Accor is already ahead, with its first Rixos resort opening in Nha Trang, Vietnam, in 2025.
Accor is also prepared to offer all-inclusive for its luxury and premium brands Fairmont, Sofitel, Pullman, Swissôtel and Mövenpick.
But therein lies the “point of differentiation” between Hyatt and others in the all-inclusive space, Chu said.
“We’ve had the brands Hyatt Ziva and Hyatt Zilara since 2015, and those brands [from the Apple Leisure Group acquisition such as] Secrets, Dreams and Breathless – those are all [pure] all-inclusive brands, not brands that have all-inclusive packaging.
“We’re not trying to serve all consumers, but consumers who want the all-inclusive experience. It can be confusing for consumers too if some properties [under an existing brand] have dual packaging while others don’t offer all-inclusive.”
To-date, Hyatt’s expansion in the region is still dominated by its organic brands, with the exception of Alila, which has Asian roots and is familiar to investors. This year saw the entry of The Unbound Collection by Hyatt in Japan, Andaz in Thailand, Hyatt Centric in South-east Asia with a new hotel in Malaysia, Alila in the Maldives and Park Hyatt in Indonesia.
That list should grow longer – with new brands on it – in the next few years. Otherwise, as Chu said, why acquire companies?
