Two Roads purchase accelerates Hyatt's push into lifestyle

Two Roads Hospitality's brands include Thompson Hotels, whose portfolio includes The Beekman in New York.
Two Roads Hospitality's brands include Thompson Hotels, whose portfolio includes The Beekman in New York.

With last week's agreement to acquire boutique hotel group Two Roads Hospitality, Hyatt Hotels is the latest hotel company to make a major bolt-on acquisition. 

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."

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