Why Hyatt Is Selling $2B in Assets | WSJ

Hyatt Hotels Corporation plans on selling off up to $2 billion worth of its real estate assets - mimicking a business strategy implemented by its competitors Marriott and Hilton years ago.
WSJ sits down with the hospitality company’s CEO Mark Hoplamazian for an extended interview to discuss why Hyatt jumped onto the asset-light strategy, and what this means for the company's future.
Chapters:
0:00 Focus on luxury
0:25 Hyatt’s shifting business model
4:25 Risks in the transition
6:03 Operating costs
9:44 Airbnb vs. hotels
Hyatt is smaller than its hotel chain competitors. So how did it get to be the most expensive? Watch the Economics of Hyatt: on.wsj.com/3xplJuQ
How did Marriott become the largest hotel chain, with over 30 brands? Marriott’s CFO explains why this is just the beginning for the hospitality giant: on.wsj.com/3J4RhZy
#Travel #Hotels #WSJ

[@wsj]

Hyatt is smaller than its hotel chain competitors. So how did it get to be the most expensive? Watch the Economics of Hyatt: on.wsj.com/3xplJuQ How did Marriott become the largest hotel chain, with over 30 brands? Marriott’s CFO explains why this is just the beginning for the hospitality giant: on.wsj.com/3THFc1g

[@johnl.7754]

Across most industries the luxury brands always have fewer locations than their mass market competitors.

[@anthonyrussell4888]

Hyatts tend to be fantastic properties. I'm a big fan of the flag.

[@colinhuff8591]

The owners of the Hyatt hotel, the pritzkers, are funding these anti Jewish protests fyi.

[@eyelovecolorado2195]

They won’t be the ones without chair when the music stops! 😂

[@19MAD95]

They want to be a more powerful Airbnb. The money is no longer in the real estate because it’s too expensive. The money is in the booking software and “servicing” the hotels.

[@sikpig7302]

@@19MAD95they also want a lighter asset base because they were leverage financing multiple properties. Noting increase just on margin lines and mezzanine financing forced them to sell.

[@giff74]

I like it when CEOs and management are actually smart and creative instead of "let's cut our workforce and spending until Wall St likes us again"!

[@Ashnesss]

You need the right business model and location for this. If you’re in a location where your business model doesn’t work, you won’t have high revenue and you can’t afford to have workforce. Small businesses can’t emulate this. They don’t have the same cash flow, assets, reserves or management. Cutting workforce has worked for many. That’s why companies do it. They don’t do it for nothing.

[@michaelgrayson409]

If you have Hyatt loyalty status, Hyatt shifting more heavily towards franchising should worry you. Look to Hilton and Marriott to see how hard their franchisees will work to not honor elite benefits and how indifferent corporate will be. Hyatt being the direct owner of their properties was a differentiator. Storm clouds are gathering.

[@LucyGreen-jg6pi]

🤩Thank goodness you brought this up! I'm favoured, $60K every week! I can now give back to the locals in my community and also support God's work and the church. God bless America,,

[@just_wendy9290]

Do you have any tips for those of us who are just starting to dip our toes into this world ? Thanks for sharing your story!

[@thegreatyorker6132]

Do you mind sharing info on the adviser who assisted you? I'm 29 now and would love to grow my portfolio and plan my retirement😊

[@LucyGreen-jg6pi]

Lisa Winters Financials is the licensed CFP I use.Just research the name. You'd find necessary details to work with to set up an appointment

[@thegreatyorker6132]

Thank you for sharing, I must say, Lisa appears to be very knowledgeable. After coming across her web page, I went through her resume and it was quite impressive.

[@DarinJames-lt6dc]

She appears to be well-educated and well-read. I ran a Google search on her name and came across her website; I’d see if she got her own channel on here on youtube but anyway thank you for sharing.

[@KamiInValhalla]

I have stayed with Hyatt quite a few times. Did a lot if business travel and always arrive around 11 PM to midnight. Never had a problem with them.

[@chi-jenyang9752]

Smart move. Divest when the real estate bubble is just about to burst.

[@ayhay4686]

They did it to themselves. Why would a successful hotel and real estate businessman agree to destroy their industry by installing hidden cameras inside the clients' rooms? Trust is a very important element for any successful business venture. Also, it's like governments don't exist. Travelers have enough stress already to deal with. Now, they have to worry about ending up streamed live on a shady website? The next millionaire or billionaire will be the one who designs and manufactures efficient mini or micro spycamera detectors.

[@joshjhoward]

​@@ayhay4686 Are you talking about Hyatt or people who own Airbnb residences?

[@HKim0072]

umm, you realize they are still using the properties that they sold right? They are still Hyatt branded hotels.

[@ayhay4686]

@@joshjhoward Hotels/motels/airbnb/exchange/rentals...etc

[@kk4649k]

Fools been saying real estate will bust since beginning of pandemic. Year after year people got it wrong.

[@J3ailey]

Love the direction that Hyatt is going. One of their best properties, has to be Alila Ventana Big Sur, which has a stand out experience: - gifts of jade and a sage smudge stick left on your bedside - on-site farm for guests to harvest fresh produce (fruits, veggies) - beekeeping experiences with honey tasting - hiking through the redwoods Hyatt truly goes above and beyond to curate one of the most uniquely memorable hotel stays!

[@ro6742]

You are completely oblivious to what’s about to happen. Love it! 🍿😎🥤

[@J3ailey]

@@ro6742 I'd expect service quality to go down for everything except their corporately owned and operated properties (the luxury experiences) - but maybe that means those hotels will have outsized value for redemptions that go beyond the perks highlighted above at the Alila Ventana!

[@undyinsoul]

hyatt is certainly deleveraging by selling hotels to the buyers (private equities, REIT, pension funds, and family offices) and will profit continuously with franchise fees, royalties, etc. with that money, buying leisure companies specializing in vacation resorts for upper-income consumers.

[@HKim0072]

The video is a little bit ambiguous, but that's only 1 part of their business. - Sell properties --> assuming it is a sale-leaseback --> buy new established properties - Work with franchisee business (30% of the total rooms) - Run the hotel business directly (70% of the total rooms)

[@TheRadioAteMyTV]

Are these guys brothers? It's like watching the same person interview themselves with a hair colour change.

[@K4R3N]

Father and son

[@randycouture32]

I can’t unsee this now 😂😂

[@Antenox]

I thought it was just me. It's like he's interviewing himself from 20 years in the future

[@adamoliver4094]

"My executive coach told me to talk more with my hands"

[@Xolition]

Loool my President in a nutshell. Crazy part is it totally works.

[@lmac7633]

Hahahaha

[@konigstiger3252]

Ayo?

[@stefanbucur6472]

They can feel the crash in the real estate market coming and they're trying to sell at the top

[@Epicknuckle1]

But these are the companies that stock up to buy land once the market is in recession.

[@Ashnesss]

Lol companies don’t sell that fast. They can predict market trends and the economy and know when to sell. That makes them smart. The buyers aren’t dumb either. They’re companies too. They buy for a reason.

[@itstheweather5859]

Yep!

[@mimusic1853]

The tale doesn’t wag the dog regardless of who owns, operates or collects a franchise % percentage for flagship use it all comes down to the economy. Rising tide raises all boats.

[@MelissaHobbs-qm8wi]

The cost of living seems to be increasing every year, making it harder to keep up.

[@amonifinau4048]

Thank you!

[@colinadevivero]

Best interview to date

[@lokesh303101]

The Spending on Tourism did diversified with many choices being offered in the Leisure Industry as for the Customer Preferences are meant for Savings then the Luxury Markets are Constrained to Selloff the Assets.

[@Epicknuckle1]

People are not focussing on the fact that this guy is brilliant. His ideas and visions are really good.

[@delaparraklaus]

Very eloquent and competent.

[@mishmohd]

I don't think it's accurate to say you have a diverse offering when in the same breath you said you're target more affluent costumers. I think what Hyatt is betting on is that most areas considered hot today will no longer be in demand, and that the new locations are the up and coming hotspots.

[@levratalex4929]

Great content

[@AnotherMartinez]

As Platinum Dreams member, this integration to Hyatt has been awful - Dreams trying to sell me perpetual “upgrades” of my membership, warnings against “losing my benefits” if I don’t join Hyatt -and so on… I think Hyatt is going to screw me up

[@erichuang1251]

You're kind of a fool to buy into timeshare programs in the first place. If you tell me next that you financed the down payment I'm going to laugh

[@itstheweather5859]

Trying to get you to buy up when you already bought into a timeshare? I smell scam here.... pyramid scheme... they have no fresh blood to buy timeshares, so now they are preasuring the timeshare owners to upgrade or else....

[@toddtheisen8386]

Hotel company that no longer wants to own hotels. A way to make cash in the short term but long term, who knows?

[@overwatch8848]

does that mean theres a bubble thats about to burst? 😅

[@mimusic1853]

?

[@MCthespeaker]

Yes

[@alexanderjules1869]

The disrespect to IHG is appalling

[@ArjunKumar-qh6wq]

good questions

[@_iErik]

11 minutes of my life that I’ll never get back.

[@ceeceeh6484]

A lot of ways to say " we need more money" 😅

[@Jack74u2]

Not a bad video though as stated this is the common playbook. It's a good story from a great brand though not necessarily different from the competition. Hyatt is later (a.k.a. more deliberate) on the franchise model rebalancing which has pros and cons.

[@mimusic1853]

I’m glad you approve we can all rest well tonight.

[@AlanSmith88888]

Because interest rates are high and they are hurting on their loans.

[@SorminaESar]

No tech news briefing from Zoe Thomas at all, I miss her❤😢

[@DeCypher67_]

curious , how much is a ( re invested a portion ) back into the business

[@jessicaregina1956]

What is that your business and what will knowing it help you?😂

[@dangervybz7522]

Not the shelter business 🤣🤣🤣

[@ajclaravall_]

We really needed this talk. 👏🏻

[@mimusic1853]

?

[@alexandrugheorghe5610]

I stayed a few times in a Hyatt hotel in Seattle, WA. It was okay.

[@matthewishunting]

"OK is not bad :D and that's why I like to hear" - Hyatt Chief Mediocrity Officer

[@fleischwolf82]

No doubt they have a brand, but its not luxury. Mandarin-Oriental, Four Season, Six Senses and some more are in another league.

[@dccalvo]

“they’re in the shelter business and we’re in the hospitality business”

[@drewconway7135]

3:14 “Did waiting a bit longer allow you to be more deliberate?” What kind of question is that??

[@shanghaidiscovery2664]

This is not really new for them. I worked for Hyatt in Asia over 20 years ago and almost all properties then were already owned by entities other than Hyatt

[@a_grown_ass_kid]

Can anyone break down the *real* reason they're doing this?

[@itstheweather5859]

Going under?

[@valentinpoggio5389]

Airbnb = shelter felt like a sophisticated way of calling me broke 😂

[@jordankendall86]

I thought it was funny how said Airbnb was in the "Shelter" business. That is a huge mischaracterization. Although there are many Airbnb's that fit the definition of low quality or are like staying at a Motel, there are also many properties on Airbnb that cater to a unique experience and many of them in unique locations. So, Airbnb is diverse in its offerings and it is far from simply a shelter business similar to a long-term furnished rental.

[@lambertois11]

Hyatt, like Marriott and Hilton, want to transfer the real estate risk to the companies who will operate their franchised hotels !

[@Elricky124]

I hope Hyatt quality does not go down with these sell offs.

[@celestialfix]

Hyatt seems equivalent to a Westin to me……their luxury brand, Park Hyatts, are not quite up to Ritz Carlton.

[@nitishasthana03]

This interview was great by virtue of the fact that how great was the interview.

[@HKim0072]

Too lazy to research, but I wish they would have done a run down on what happens now. Ok, so they sold the properties. I'm guessing it's some type of sale-leaseback arrangement? And, Hyatt built a new hotel in Seoul, Korea in 2019: Andaz brand. Who paid all the upfront costs? Is it some type of joint venture with a REIT? etc etc

[@Nainara32]

I agree, more on the new business model would be interesting. If they're a service company now, what's the actual value proposition that they're offering relative to their competitors?

[@andrewesquerra4356]

No, I assume the new hotel owners use the Hyatt brand name, processes, proprietary info, etc. In exchange, they pay a fee to Hyatt. Just like a chick-fil-a. Normal franchise business model.

[@HKim0072]

@@andrewesquerra4356 Obviously, the video did a poor job explaining it then (or you did a poor job listening). That's only 30% of their rooms. The other 70% are directly managed by Hyatt. I don't think you are familiar with the sale-leaseback business. Please research before commenting.

[@itstheweather5859]

Why would Hyatt secretly sell their prestegious hotel in Lake Tahoe to Larry Elision and have a deal where Hyatt name is intact? I smell a shell game of them selling off all their prime hotels and keeping their names and then when only the low quaity hotels remain, they will pull the plug.

[@LewisFriso]

By virtue of discussing the situation in the aggregate, about 10x, I feel this gentleman needs to expand his vocabulary,

[@Gabriel-dn4gg]

10:15 “They’re in the shelter business. We’re in the hospitality business.” Funny because every time I try to check in at one of your hotels I have to deal with a cranky crack head single mother who tries to get cute with me. Every time.

[@jaysoncagula6226]

Wow

[@RiseUp_Again]

Risk in this Strategy is Property Owners May Switch to Other Big Names offering Better Incentives

[@zisun7483]

India is interested to buy those assets

[@byzameli]

Isn't this like how Apple used Samsung components for the iPhone, and then Samsung became their rival? What stops MCR from making their own brand?

[@tirystanzara8366]

If he says by virtue of one more time I might sell

[@koshile3794]

Ziva.

[@bl2125]

JB Pritzker is saving up cash for his presidential run 🤦🏻‍♂️

[@JamesMEsler]

Excellent

[@jessicaregina1956]

Because they are rebranding into Gyatt.😂

[@VictoriaAlfredSmythe]

Thank you from Manhattan ©2024

[@dazhill50]

This is a move to counter balance Airbnb, but also implement some of the core practices of Airbnb.

[@phoenix5054]

You think hotels are losing to Airbnb? 😂

[@bash102]

Hmm always wonder when people sell at the bottom of the market, why not sell when in a few years when we’re back at a bull market with a strong economy

[@jorgegomez524]

We are in a bubble we better get out while we can, that’s what he doesn’t say saying it😂

[@PJVist]

Aka we don’t want poor guests!

[@02nupe]

That part!

[@_eaturveggies01]

3:26 “Motivated Seller” aka Broke MF or Going Broke 😂

[@ParisLawLess]

I'll buy that for a dollar 💵

[@AcctistaZ]

Advertisement

[@1sweettime207]

Advertising!

[@Unreasonable1756]

Hyatt correctly sees that the middle class is dyeing the poor are poorer and the rich is becoming ungodly super rich.. So its selling off all its mid hotels in exchange for those extremely nice hotels that they can charge 10K a night to stay in.

[@learningearning8385]

Inflation and the dollar weakening but instead of holding real estate..you sell? you’re now selling service as a property management company but this is a big bet that companies would be able to afford your services. I guess they’re offloading old property.

[@TeamTimeRiders]

Yeah was really a shock to hear. This guy doesn’t look like he knows how to run a company at all. Like he brings in freshly graduate consultants who told him that selling his properties was the next big thing and he listened.

[@Dakid015]

I wonder if this is part of the exposure to the struggling commercial real estate market? We know the CRE market is carrying higher interest debt and hasn't been performing. Maybe the CEO had properties exposed to this market and sees more clouds coming over CRE. So offloading while he could still get top dollar was the move? Could be wrong

[@user-vj4sn1hk3n]

This trend has been seen for some years already the rich gets richer than the not rich haha.

[@ElishaZakai]

I love Hyatt, they are by far the best award program. I never pay for my stays there…

[@koolflows7581]

ouch

[@mack-uv6gn]

Marriott does the same thing

[@danielgolarz674]

WSJ please talk about the out of control OCCUPATIONAL LICENSING for k-12 teachers that's why we have teacher shortages I'm the author of EIGHT DAYS IN AN INNER CITY SCHOOL

[@felipeballadares8205]

YOU NEED TO OWN ASSETS.. OTHERWISE IT SOUNDS JUST LIKE A MIDDLEMAN

[@OHANA-Beach-Suites-CDO]

I'M A REGULAR GUY IN SEATTLE......BUILDING A BEACH HOTEL IN THE PHILIPPINES! DREAM'S COME TRUE EVERYONE!!!!!!!!

[@braydenborbely]

This interviewer?? Did he just wake up?

[@brucehicks5817]

Hyatt pulling a Four Seasons.

[@gibbonholder3274]

🎉 RAS HOUSE MUSIC 🎶 LABORIE BEACH ⛱️ ST LUCIA

[@caribbeanradiology7004]

Hyatt downtown Atlanta is horrible.

[@memonk11]

Yup, another company that will divest itself right into non-existence.

[@khunopie9159]

Drinking game: "asset light"

[@jutah]

scrolling through the comments learning about hyatt and happening upon mr khunopie

[@khunopie9159]

@@jutah I see you see me Jonny! 🍻

[@hkmorhsi]

Recession and bankruptcies.

[@OnlineVibes-bs9jn]

Um no. You did this to get more cash flow to the PRIVATE EQUITY firm that owns the company! So many lies!

[@macrosense]

The Arabs. Taiwanese. Some Ukrainian oligarchs

[@TheDavidlloydjones]

The CEO of Hyatt Hotels is Mark Hoplamazian, not the "Mark Hole" that you throw on screen, Wall Street Journal. The most important words in any person's life are those that make up their own name, but the Journal's carelessness would be a gratuitous insult, both to Hoplamazion and to us, their audience, even if this were not so. Take it down and fix it, OK, folks?

[@mimusic1853]

I’m sure whoever has the intent to reach this man to hire him away knows how to reach him. They aren’t coming to KZbin in search of his contact information.

[@K4R3N]

"People is our #1 cost." Get ready to be replaced by AI 🤖

[@jimgilmore5349]

Where did WSJ find this interviewer? What a sleepy head. I’ve seen better interviews conducted by high school students. Chat GPT could have done a better job. Probably a diversity hire.

[@Dakid015]

Except he doesn't fit the diversity profile?? So not sure where you're going?

[@08996688]

It’s a disaster waiting to happen. Trust me, people aren’t looking for that regardless of how much we make. Everyone wants a comfortable, clean, 3-4⭐️ hotel they can save money on.

[@chebrubin]

Oh yeah. I like a Hyatt Regency. They loose money on those suites to Globalists with the club and free breakfest.

[@AndreaDoesYoga]

Hyatt's bold move, hope it pays off! 🏨💰