As part of the Americas
Lodging Investment Summit’s Patron sponsorship program, ALIS organizers asked
Hyatt’s Jim Chu eight timely questions as we prepare for the 22nd
annual event January 23-25, 2023, at the JW Marriott/Ritz-Carlton Los Angeles
L.A. LIVE. Following are his responses.
inflation and the threat of a recession affected the U.S. hotel franchising and
CHU: For Hyatt, our customer
base is the high-end traveler in each segment that we serve. Research shows
that among the various categories of spend for our customer base, leisure and
entertainment activities are the still the top two categories will show
continued strength. Booking data and hotel ADR metrics continue to show strong
demand through the end of the year.
ALIS: Most forecasts show
supply growth checking in at about 1% each year for the next two or three
years. How do you see it playing out based on Hyatt’s pipeline?
CHU: Hyatt occupies a unique position in the industry in terms
of our size, scale, and footprint. We take a thoughtful approach to development
and growing with intent.
In 2017, we announced
our asset disposition strategy, and from 2017 to 2021, we sold $3 billion of
assets and reinvested that money into those proceeds into asset-light
businesses or return to shareholders over the course of that time. The
acquisition of Apple Leisure Group (ALG) being the most recent and significant
example of how we’re executing against our expanded asset disposition strategy.
Further, the strength
of conversions continues to drive our industry-leading net rooms growth. In
fact, 40% of our new openings from January through June 2022 were conversion
hotels, largely rebranding to one of our Independent Collection brands – The
Unbound Collection by Hyatt, JdV by Hyatt, and Destination by Hyatt.
ALIS: What’s the message to
hotel owners, investors, and developers from the lending community in general
as 2023 approaches?
CHU: Although interest rates
have been on the rise and many properties are slated to have their debt mature
in the next 12 months, property performance has remained strong and continues
to support a high level of transaction activity going into 2023. At Hyatt, we
continue to believe that many owners will execute asset recycling plans
due to strong performance.
ALIS: Based on your portfolio
and what you’re seeing throughout the industry, what segments are the most
sought after for development and franchising opportunities? Why?
CHU: Hyatt’s portfolio is
heavily weighted towards luxury and leisure travel – nearly 70% is classified
as Luxury and Upscale – optimally positioning us to serve the more resilient,
higher-end guest who continues to prioritize travel.
serve that guest, we are focused on growing our Inclusive Collection, our new
global portfolio of distinct luxury all-inclusive resort brands, in new markets within and outside of the Americas to
attract diverse groups of travelers seeking immersive all-inclusive resort
In fact, we recently announced plans for five new all-inclusive resorts in
Bulgaria through the Secrets, Dreams, Breathless and Alua brands.
addition, wellbeing continues to be a focus among all travelers, and brands
like Miraval and Alila continue to be top performers.
has the labor shortage affected the hotel development process? Is it something
that the industry will deal with long term?
CHU: Staffing is a challenge
across the industry, and we are continuously evolving our recruitment
techniques, relationships, and strategy by examining
all aspects of the candidate and colleague experience at Hyatt:
- Piloted rapid hiring practices to get people
into roles more quickly
- Committed to advancing DE&I through
our Change Starts Here commitments – hiring, promoting, and retaining
diverse talent to increase the representation of women and people of color
- Hiring 10,000 Opportunity Youth – people
ages 16 to 24 who are neither in school nor working – at Hyatt hotels around
the world by 2025 through our RiseHY program
colleagues are the heart of our business, and we always strive to be the
employer of choice.
the status of the shortage of materials and the supply-chain issues and their
effect on development? How much time have these issues added to the development
CHU: The pandemic has certainly presented supply chain disruptions, yet Hyatt
remains committed to helping address these challenges in a variety of ways,
including making prototypes more efficient, simplifying building interior and
exterior finishes and details to streamline costs, exploring modular
construction for speed to market, and expanding our supplier acceptance so that
we can collaborate with
additional sources, particularly locally relevant solutions.
ALIS: What’s the most under-estimated challenge the hotel industry
faces, and why?
CHU: One of the most underestimated
challenges is moving fast enough to win deals, while properly balancing
volatile construction and lending costs with underwriting that accurately
captures future hotel performance
ALIS: What’s the most under-estimated opportunity for the hotel
industry, and why?
CHU: Environmental, social, governance (ESG), specifically the
‘E’, presents unique and ownable opportunities for our industry to positively
impact local communities. Increasingly, sustainability is expected by our
stakeholders. Fold in external pressures such as the Inflation Reduction Act
and anticipated SEC Climate Disclosure requirements and prioritizing
sustainability is a must. Being part of the hotel industry, we have a vital
role in protecting, rebuilding, and revitalizing destinations and the
opportunity to drive real impact now and in the future.