We've known for multiple years following the COVID-19 pandemic that the hotel industry has been under-renovated.
A regular refrain at hotel industry conferences in recent years has been how cash-strapped owners who have been getting the benefit of the doubt from hotel brands for years will soon have to cope with significantly less flexibility on property improvement plans. This could possibly, eventually spark a wave of transactions.
That wave of transactions still hasn't materialized, but there seem to now be some real life consequences. Hyatt Hotels Corp. announced yesterday during its third-quarter earnings call that there has been a material impact on its net unit growth by the number of hotels existing its system because of an unwillingness to keep up with brand standards and PIPs.
CEO Mark Hoplamazian said the company had higher-than-expected attrition in the third quarter, nearing 1.5% for year-to-date 2024, which is "significantly higher than our typical run rate."
He added Hyatt executives view this as a short-term, not long-term trend, ultimately, but after years of talk that something could be coming down the pike, it's interesting to see material impact from it.
As for what's next, who knows. It's not a big enough needle pusher for hotel brands at the moment, and even Hyatt reported a record pipeline in the quarter. But if it's starting to affect hotel brands in a noticeable way, maybe it's growing into a big enough force to finally push more properties on to the market and to get them to change hands. Only time will tell if that's truly the case.
Let me know what you think on X, LinkedIn or via email.
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