With last week's agreement to acquire boutique hotel group
Two Roads Hospitality, Hyatt Hotels is the latest hotel company to make a major
Two Roads was established by John Pritzker, founding partner
and director of Geolo Capital, the private equity firm that owns Two Roads. He is the son of Hyatt founder Jay Pritzker.
"There's definitely been more consolidation, and it's
moving quickly," John Pritzker said. "Marriott bought Starwood, IHG
bought Kimpton and Accor bought 50% of SBE. It had been occurring to us that we
trail many of our competitors in size, and the name of the game moving forward
is going to be distribution, loyalty programs and IT resources.
"This is a great opportunity for our owners we've operated
hotels for, and we're in the same boat, because Geolo will now represent the
largest number of properties that Hyatt manages for one ownership group."
Two Roads' portfolio includes the Alila, Destination Hotels,
Joie de Vivre, Thompson and Tommie brands, spanning a total of 85 properties.
The move extends Hyatt's reach into 23 new markets and will help fast-track the
company's expansion into the lifestyle space, said Bruce Baltin, managing
director of consulting and research firm CBRE Hotels.
"They're already in the lifestyle space but only in a
small way," Baltin said, citing the company's Unbound Collection by Hyatt
portfolio of independent properties and its Andaz brand. "This gives them
a much bigger footprint in this area, which is a segment everyone else has also
been moving toward."
Baltin added that Hyatt's addition of the Alila brand, which
operates hotels throughout Indonesia, India, Malaysia, China, Cambodia and
Oman, will also give the company a notably stronger presence in Asia.
Hyatt detailed plans to consolidate its existing lifestyle
brands and the Two Roads stable into a new lifestyle division.
Robert Cole, Phocuswright's senior research analyst for
lodging and leisure travel, said the deal is a far better bet than opting to
launch lifestyle brands from scratch.
"Some of these properties are large, complex and
full-service resort hotels, and those take a long time to build," Cole
said. "You can't just start churning them out quickly to add that volume.
And with a luxury lifestyle hotel like Thompson in particular, that type of
branding is a little scarcer as well. To create and develop that kind of
independent brand organically can take a decade, so for Hyatt, it's a great
idea to just go out and buy Thompson instead."
Cole added, however, that Hyatt's challenge moving forward
will center on how well the group is able to clearly define and differentiate
the brands in its expanded stable.
"I would think there could be a bit of a conflict
between two brands like Andaz and Thompson," Cole said. "But Hyatt
could look at the two in a big market like, say, New York City, and say, 'We
can have both.' So there may be markets where it could be an issue and other
markets where it isn't."
Overall, however, Cole said he views Hyatt as still having
plenty of runway when it comes to adding brands.
"Hyatt doesn't have the same level of challenge as a
company like Marriott when it comes to rationalizing brands, because the
company is nowhere near as large," he said. "And outside of maybe
Thompson, these brands are not exceptionally well known by consumers.
"With Hyatt's backing and promotion, though, that could
very likely change. These brands have some very cool boutique properties, and
with Hyatt's help, I think more people will discover them."