When we met with Mark Hoplamazian, president and CEO of Hyatt Hotels Corporation, earlier this year in the model room of the new Park Hyatt New York, we were impressed with his keen eye for the details of that particular space, which he was seeing for the first time. The bathroom lighting, the position of paintings on the wall and the overall aesthetic were met with extremely close inspection.
And why not? The stakes are high financially, and for the public perception of the Park Hyatt brand. The hotel opens this summer on the first 25 floors of the iconic, 90-story One57 Manhattan skyscraper as the global flagship for Park Hyatt, sure to create consumer buzz. Upon completion, Hyatt will own two-thirds of the hotel in partnership with Extell Development Company; that adds up to an approximately $253-million investment for the overall $375-million project. The hotel’s general manager is among the best in the business; Walter Brindell, who is also an area vice president, has been with Hyatt for 26 years. Hailing most recently from Park Hyatt Chicago, in 2011 he was named Hyatt’s General Manager of the Year.
“Park Hyatt New York really establishes a new standard-bearer for the brand because it’s in a prominent location in a prominent building in arguably the most important travel city in the world,” Hoplamazian told Hotel Management.
The hotel is a game changer for the brand, and is meant to shake things up in Manhattan. “The goal is to make it the best luxury hotel in New York,” he added.
Indeed, standard and deluxe rooms at Park Hyatt New York will be among the largest in the city at 475 and 530 square feet respectively, on trend with affluent consumer demand for plenty of space. Of the 210 rooms, nearly half are suites; clearly aiming to please the upscale traveler, who will pay an average $1,000 rate for the privilege of staying in an entry-level room category.
Hoplamazian explained his careful scrutiny. “It’s to determine if the room looks better the closer I look, or does it look worse? I’m happy to say I have a good impression looking at the simple things like the alignment of the pictures to the ceiling and all the product-related stuff. That all creates an expectation: a sense of place for the person who picks up on these visual cues passively and forms an impression of the experience they are going to have. The guest might not be a design expert, but they’ll elicit a sense of comfort and confidence from the decisions a designer has crafted for the look of the room and how it’s been executed,” he said.
That Hoplamazian has such an intuitive sense of design is notable considering he cut his teeth on the investment side of the business before taking the helm at Hyatt in 2006. Raised on the Main Line of Philadelphia, Hoplamazian graduated from Harvard as an economics major (his thesis was on lesser-developed countries), spent a bit of time at the London School of Economics and worked in Manhattan as an investment banker before heading to grad school at the University of Chicago Booth School of Business. Being in the Windy City brought him the opportunity in 1989 to work for the wealthy and philanthropic Pritzker Organization (TPO), run by the famous Chicago family. There, he essentially ran the family business, investing capital for its many entities. In 2006, Chairman Tom Pritzker asked Hoplamazian to serve as interim president for one of TPO’s companies while a search for a new CEO was underway. That company was Hyatt Hotels, and Hoplamazian, after four months, liked the job quite a lot. “I was smitten,” he said. “I really fell in love with it. I fell in love with the people. I fell in love with the industry.”
That didn’t mean there wasn’t much more to be done that required his intense business savvy. Hoplamazian led Hyatt through its 2009 initial public offering and has grown it to a multi-branded business with $4 billion in annual revenue and a $9-billion market capitalization.
Since the IPO, the company has grown from 399 hotels to more than 550 hotels, entering more than 70 new markets, including Mexico City, Amsterdam, Costa Rica, Tanzania and Kuala Lumpur. New brands, such as Hyatt House, Hyatt Ziva and Hyatt Zilara, have been added; the former is an extended-stay product, the latter two are all-inclusives.
Consider the growth in New York alone. Before 2009, Hyatt, then a privately held company, only had one hotel in Manhattan, the Grand Hyatt, and now, with the addition of Park Hyatt New York, will have eight, including Andaz Wall Street, Andaz 5th Avenue, Hyatt 48 Lex, Hyatt Union Square, Hyatt Times Square and Hyatt Place Midtown-South.
The luxury side of the business has also been well tended to. In 2009, there were 25 Park Hyatts; today, there are 32. Significant growth is planned, with Park Hyatts set to open in Los Cabos, Mallorca, Zanzibar, Bangkok, Marrakech, Guangzhou and Phuket.
All, like New York, will have a strong sense of place; Park Hyatt Vienna opened June 1 as the only hotel in the city’s Golden Quarter, in a 100-year-old building that housed the Austrian-Hungarian Monarchy Bank. Ceilings are 14-feet high and guestrooms are among the largest in Vienna, ranging from 430 to 1,830 square feet.
Such expansion for any luxury hotel brand is news enough, but know as well that the goal for any Park Hyatt is to be the top performer in its market, the best in its locale.
“A significant proportion of our Park Hyatts have number-one or number-two positions in their respective sets,” said Hoplamazian. “It’s really important for us from a financial perspective to ensure we’re able to operate at the top of the respective market.” Deliberately determining if there is a demand from the company’s customer base helps. When that’s confirmed, it’s noted whether there’s a possibility to create a strong sense of place by working closely with local cultural establishments and artists.
Hyatt’s relatively small size as a hotel company enables it to be quite strategic with every addition. “Every incremental hotel is quite important to us. It makes a big difference to us. We don’t need to go and spray and pray and just add for the sake of adding,” Hoplamazian said. For that reason, Park Hyatt doesn’t seek to simply be in gateway cities; it scouts sites whose locales have a strong voice, or, according to Hoplamazian, that have “incredible centuries of history and magnificent cultural aspects. The property itself is unique and has its own history, where everything about our ability to express the brand can be fulfilled.”
NEW YORK STATE OF MIND
Case in point: Park Hyatt New York will showcase the works of local artists, chefs, designers, musicians and collectors. The arts in Park Hyatt Chicago are also on full display. The famed Gerhard Richter piece, “Domplatz, Mailand,” which had long graced its lobby, was sold at auction last year for more than $37 million, but plans are to replace it with something of a similar stature. The company has also hired a vice president of luxury brands, Katherine Melchior Ray, to bring local culture into its hotels throughout the world. And Hoplamazian told us that he and Tom Pritzker together have also spent time on the art acquisition front for hotels throughout the company, in many cases commissioning pieces from local artists who will become collectible over time. “We’re supporting them now,” Hoplamazian said.
It’s this expression of luxury that helps each Park Hyatt have a pretty strong shot at being the best hotel in every market it’s in. Of Park Hyatt New York, Hoplamazian said the luxury offering extends beyond the large room sizes and the carefully curated art program, which will include 350 gallery-worthy pieces of art on property.
That offering also includes engaging the guest, an engagement that, interestingly, begins with that keen attention to the aesthetics of a hotel that Hoplamazian displayed in the model guestroom at Park Hyatt New York.
“If you go to the Park Hyatt in Buenos Aires or Shanghai or Tokyo, the more you experience them, the more you appreciate exactly how things were presented to you. That’s my experience with them,” he said. “We need to ensure that people know that we are actually caring for them through that sense of commitment to the details.”
After that comes a service mantra that’s “deep and authentic, sincere and emotionally based, as opposed to a highly scripted master-servant kind of relationship,” said Hoplamazian. That’s really the direction that’s being taken for the Park Hyatt brand overall, he continued. Team members are encouraged to bring a piece of themselves, a sense of their personalities when providing service.
“That has a place in how people think about luxury today,” said Hoplamazian.
Bottom line: People will leave Park Hyatt New York “feeling more fulfilled, more engaged, and part of the city while they were here,” he said. “That’s the mandate. Internally, Park Hyatt New York has taken on a great importance for the brand. The combination of all this will set a new standard for the experience of being in a luxury hotel. That’s the goal.”
Multiple brands, one clear vision
With 10 brands under its belt, Hyatt Hotels Corporation is poised for global growth—and is doing it through a two-pronged approach: selling off real estate assets to shore up its balance sheet and seeking out mutually beneficial partnerships. The latter was huge news for the company last July, when it struck a partnership deal with Playa Hotels & Resorts, allowing Hyatt to enter the all-inclusive space for the first time.
At the time of the deal, Hyatt said it expected to invest a total of $325 million, consisting of $100 million for an approximate 20-percent ownership stake in Playa and $225 million for convertible preferred stock. In connection with the Hyatt investment, Playa will enter into franchise agreements with Hyatt for six of the 13 resorts, or approximately 2,800 rooms, which will operate under Hyatt brands following the completion of significant renovations. Under an agreement with Hyatt, Playa will pursue the acquisition or development of new all-inclusive resort opportunities under Hyatt’s brands, and it will also have certain rights to operate Hyatt-branded all-inclusive resorts in five Latin American and Caribbean countries on an exclusive basis through 2018. The first two Hyatt-branded all-inclusive resorts, located in Mexico, opened last year following multimillion-dollar renovations of existing properties. Four additional Hyatt-branded resorts, in Jamaica, Mexico and the Dominican Republic, are expected to be introduced in 2014 and 2015. On the deal, Stephen Haggerty, global head of real estate and capital strategy for Hyatt, told The Wall Street Journal, “The all-inclusive segment has grown rapidly over the past 20 years. Playa gives Hyatt a platform for future global growth in an attractive segment.”
At the same time, Hyatt, like other like-minded hotel operators, is on an asset-light path, continuing to shed owned real estate. This course was typified by its $313-million sale of 10 hotels to RLJ Lodging Trust, a deal that closed in March. The sale included Hyatt’s Hyatt House and Hyatt Place brands, totaling 1,560 rooms, predominantly on the west coast.
And Hyatt isn’t done. Just last month it said it was committed to selling a 32-hotel portfolio worth as much as $500 million, also consisting of Hyatt Place and Hyatt House hotels.
“Our asset recycling strategy continues to provide us with additional capital to invest in growth while maintaining brand presence,” Hyatt CEO Mark Hoplamazian said during Hyatt’s first-quarter earnings call. “Our strong balance sheet and high quality asset base provide us with the flexibility to pursue growth in markets in which we are underrepresented. We expect to continue our asset-recycling program while also returning capital to shareholders. Our business model has significant leverage and we are positioned well for robust, sustainable growth in the years ahead.”
In regard to new openings, Hyatt isn’t letting up across the board. As of press time, its newest unveiling was the June opening of the 145-room Hyatt Place Champaign/Urbana, near the University of Illinois campus. Also in June, Hyatt opened the much-anticipated 164-room Andaz Tokyo Toranomon Hills, located on the top floors of the 52-story Toranomon Hills tower. Hyatt also announced plans for a new Hyatt Regency hotel in Bloomington, Minn. The Hyatt Regency Bloomington Central Station is expected to open in early 2016 and will be managed by Aimbridge Hospitality.
Other headline news for Hyatt this year was in May when it announced the sale of Hyatt Residential Group for approximately $190 million to Interval Leisure Group. In connection with the agreement, Hyatt selected ILG as Hyatt’s exclusive licensee in vacation ownership.
AT A GLANCE
HYATT HOTELS CORP
Portfolio: 554 properties in 47 countries
(as of March 31, 2014)