Hyatt Hotels' Business Model
What Need Does It Serve?
Hyatt Hotels is a global hospitality company that manages, franchises, owns, and develops Hyatt portfolio of hotels, resorts, and residential and vacation ownership properties around the world.
As of Dec 31, 2018, the company's worldwide portfolio consisted of 843 properties with 208,207 rooms.
Hyatt's full service hotels and resorts operate under five established brands, Park Hyatt, Andaz, Hyatt, Grand Hyatt and Hyatt Regency. The company also has two select service brands, Hyatt Place and Hyatt House.
In 2013, the company added Hyatt Ziva and Hyatt Zilara, an all inclusive category to its portfolio.
Has 3 Operating Segments-
1. Owned & Leased Hotels: It includes income from hotel operations such as room rentals and food & beverage sales from properties that are owned or leased by the company.
2. Management & Franchise Hotels: It includes income from properties where the company has a long-term management agreement or has franchised one of its brands. (Note: The M&F revenues includes costs that are incurred by the company on behalf of owners of these properties such as payroll, marketing, loyalty program, etc.).
3. Corporate & Other: It includes income from co-branded credit cards, Exhale and other corporate functions.
What Are The Alternatives?
Other hotel companies such as Four Seasons, InterContinental, Ritz Carlton, and Carlson Hotels are major competitors.
What Is The Basis of Competition?
Hotel facilities, location of the hotel, proximity to tourist attractions, exquisite offerings, ambience, brand, sophisticated decor, and promotional offerings.
Total Revenue growth of about $400 million over 2019-20 to be driven by the Management & Franchise Segment
Hyatt Hotels has added $100 million to its revenues over the last two years.
Revenue growth over the next two years to be driven by the Management & Franchise Segment.
Total Revenues (A+B+C)
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Owned and Leased Hotel Revenues (A)
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Management And Franchise Revenues (B)
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Corporate & Other Revenues (C)
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(A) Owned & Leased Hotel Revenues to decrease by 2.6% ($48 million) in the next two years, with its share of Total Revenues to fall by 5%
Owned and Leased Hotel revenues have been declining in recent years due to Hyatt's overall strategy of driving asset-light growth by focusing on its Managed and Franchise Model.
The company has been selling its various Owned Hotels and converting them to Managed or Franchise properties.
The share of O&L Rooms has fallen from 12.5% in 2015 to just 8% in 2018.
Total Owned and Leased Hotel Revenues (A = D+E)
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O&L Hotel Room Revenues (D)
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O&L Hotel Non Room Revenues (E)
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(B) Management & Franchise Revenues to increase by 20% ($472 million) in the next two years, with its share of Total Revenues to rise by 5%
Hyatt's Managed and Franchise Revenues have been growing due to the surge in number of rooms.
Notably, the share of M&F Rooms has increased from 87.5% in 2015 to 92% in 2018.
Total Management And Franchise Revenues (B = F+G+H)
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Americas Management & Franchise Revenues (F)
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ASPAC Management & Franchise Revenues (G)
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EAME/SW Asia Management & Franchise Revenues (H)
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Determining Americas M&F Revenues
Americas M&F Revenues have been rising due to the growth in net rooms.
For trends in room growth and associated guidance, please refer the Appendix below.
Americas Region includes properties located in the U.S., Latin America, Canada, and the Caribbean.
Americas Management & Franchise Revenues [A = B x C]
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Americas Management & Franchise Room Revenues [B]
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Americas Management And Franchise Revenues As Percentage Of Room Revenues [C]
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Determining ASPAC M&F Revenues
ASPAC M&F Revenues have been rising due to the growth in net rooms.
For trends in room growth and associated guidance, please refer the Appendix below.
ASPAC Region includes properties located in Southeast Asia, Greater China, Australia, South Korea, Japan, and Micronesia.
ASPAC Management & Franchise Revenues [A = B x C]
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ASPAC Management & Franchise Room Revenues [B]
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ASPAC Management And Franchise Revenues As Percentage Of Room Revenues [C]
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Determining EAME/SW M&F Revenues
EAME/SW Asia M&F Revenues have been rising due to the growth in net rooms.
For trends in room growth and associated guidance, please refer the Appendix below.
EAME/SW Asia Region includes properties located in Europe, Africa, the Middle East, India, Central Asia, and Nepal.
EAME/SW Asia Management & Franchise Revenues [A =B x C]
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EAME/SW Asia Management & Franchise Room Revenues [B]
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EAME/SW Asia Management And Franchise Revenues As Percentage Of Room Revenues [C]
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Appendix: Total Rooms Across Geographies
Hyatt's Total Rooms have been growing steadily at a rate 7-8% annually.
The jump in 2018 is due to the acquisition Two Roads Hospitality in Q4 2018.
In 2018, Hyatt had 89,000 rooms in pipeline which we expect the company to add to its portfolio by 2022 (consistent with the current growth rate of 7-8%).
Total Rooms
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% Change In Total Rooms
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Total Rooms Across Owned & Leased Hotels
O&L Room portfolio is expected to shrink further due to the planned monetization of owned assets.
Nearly 80% of Hyatt's O&L rooms are in the Americas Region.
The company plans to raise $1.5 billion from asset sales by March 2022.
O&L Rooms
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%Change In O&L Rooms
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Total Rooms Across Americas M&F Hotels
Per 2019 guidance, Net Rooms are expected to grow in by 4-5%.
To offset declines from O&L segment (which mainly comprises of Rooms in the Americas Region), we expect Americas M&F to grow by 6% p.a. till 2022.
Americas Region includes properties located in the U.S., Latin America, Canada, and the Caribbean.
Americas M&F Rooms
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%Change In Americas M&F Rooms
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Total Rooms Across ASPAC M&F Hotels
Per 2019 guidance, Net Rooms are expected to grow in by 9-11% in ASPAC Region.
ASPAC Region includes properties located in Southeast Asia, Greater China, Australia, South Korea, Japan, and Micronesia.
ASPAC M&F Rooms
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%Change In ASPAC M&F Rooms
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Total Rooms Across EAME/SW Asia M&F Hotels
Per 2019 guidance, Net Rooms are expected to grow in by 16-18% in EAME/SW Asia Region.
EAME/SW Asia Region includes properties located in Europe, Africa, the Middle East, India, Central Asia, and Nepal.
EAME/SW Asia M&F Rooms
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%Change In EAME/SW Asia M&F Rooms
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