Hyatt Hotels Corp. executives believe their newly launched Hyatt Studios brand offers them a chance to grow both their pipeline of properties along with their World of Hyatt loyalty platform by adding scale in the upper-midscale extended-stay segment.
Speaking with Hotel News Now ahead of the official announcement of the brand's launch Tuesday, Hyatt President and CEO Mark Hoplamazian said Hyatt Studios already has letters of interest signed for more than 100 projects, many of which will be in markets that don't have any existing Hyatt properties.
He said the new brand is a "unique opportunity to fill a white space."
"There are two primary constituent groups for this: There are owners and World of Hyatt members," he said. "The hotel owners sat around the table and designed this brand with us. With respect to the World of Hyatt members, we've learned a lot of Hyatt customers, loyalty members, when they're staying outside of the Hyatt system, almost two-thirds of them are doing so because there's not a Hyatt within a 5-mile radius [of where they want to be]. ... So we recognize that our core customer base that exists today would stay within network if they had an option."
Hoplamazian noted that growth in secondary and tertiary markets will be key for the brand going forward, but like all brands, it will be built in a flexible way to make projects pencil even in higher-cost primary markets.
He said he doesn't see the move into a lower segment as a shift in the company's strategy of focusing on high-end travelers and believes the hotels' amenities will appeal to those who are within the high-end of the upper-midscale segment.
The first Hyatt Studios hotel is slated to begin construction this year and open in 2024. The brand will be led by Dan Hansen, former executive chairman of Summit Hotels Properties.
The news release announcing the Hyatt Studios launch describes the brand as being built around "a developer-informed approach ... prioritizing scalable construction options and an efficient operating model designed to adapt to local market needs across primary, secondary and tertiary markets alike."
The news release stated: "Guestrooms will marry form with function and offer suites with kitchen amenities to provide comfort during extended trips away from home. The Hyatt Studios food and beverage experience will include a complimentary grab-and-go breakfast and a best-in-class, 24-hour market with a wide variety of options to satisfy extended-stay guests — from health-conscious snacks and ready-made meals to sweet and savory staples to fulfill travel cravings, all of which can be prepared and enjoyed in the guestroom’s kitchen featuring a multi-function convection microwave."
Hoplamazian said the quality of the rooms, the grab-and-go breakfast, a premium grab-and-go market place and in-room convection microwave ovens will all be key differentiators in the space.
"So there are all these little details that we have built into our thinking to really create a different type of experience," he said. "We're going to have fire pits outside of the hotel, and subject to getting liquor licenses, we will offer alcoholic beverages in the marketplace so you can even have a beer or wine while you hang out by the fire pit outside."
Expanding a Segment
This marks the company's second foray in the upper-midscale segment following its joint venture brand UrCove in China. Those two brands are collectively the lowest brands in Hyatt's portfolio in terms of segment.
Hyatt Studios joins Hyatt Place, Hyatt House and Caption by Hyatt in the company's portfolio of select-service brands. Across its full portfolio of brands, Hyatt had 1,250 hotels in 75 countries at the end of 2022.
While the company has traditionally worked in higher-end hotels, Hoplamazian said there is an important network effort of giving their core customers an option at each end of the spectrum. He noted there is currently no plans to move into midscale or economy, noting the Hyatt Studios launch will "consume all of our time and attention," but wouldn't rule out future growth across the board.
"I've been asked in the past whether we'd go into upper midscale, and my answer always was 'Never say never,'" he said.
The Hyatt Studios launch marks a shift from the company's recent activity not just in terms of segmentation but in its model for growth. Over the course of several years, the company has sold billions of dollars worth of owned real estate and flipped that capital into purchasing brands and operating businesses, headlined by deals for companies like Two Roads Hospitality, Apple Leisure Group and, most recently, Dream Hotel Group.
While this launch marks an opportunity for organic growth, Hoplamazian said his company will continue to pursue acquisitions when opportunities present themselves.
"We have a record pipeline at this point, so we will continue to execute as we have been," he said. "And this is additive to that."
More Hyatt Choices
Hyatt executives noted there's a significant opportunity and interest in the upper-midscale extended-stay space, with it clearly being the darling of the recovery from the depths of the COVID-19 pandemic. Beyond that one-off opportunity, the network effect of moving into new geographies and giving World of Hyatt members a deeper level of choice for different stay occasions could be the key benefit, Hoplamazian said.
"A lot of the markets that are represented in that first [wave of letters of interest] are markets in which we have no representation at all," he said.
He said the loyalty benefit of that will be twofold: More World of Hyatt members will stay within network more often, and some travelers who are not members or do not regularly book within the Hyatt network will be more apt to do so.
"We recognize there are guests who are not currently World of Hyatt members who frequent these types of hotels at these price points in these markets, and it's an entry point to World of Hyatt," he said.
Asked whether the move to a lower segment domestically could be viewed as a hedge against future downturns, Hoplamazian said that's definitely a benefit of adding scale with Hyatt Studios, but it's not their top priority in creating the brand.
"I would say it gives us another dimension of commercial activity that has a different profile of travel patterns, and so I think it's true that will probably benefit us in terms of the different cycles we see in the future," he said.