Hyatt’s major problems are:
- that their footprint is so much smaller than major players IHG, Hilton, and Marriott (they’re about 10% the size of Marriott), and
- that they’re building a high-end strategy while their growth has come largely in the limited-service sector.
They tried to grow by buying Kimpton, but wouldn’t overpay as much as IHG did. They tried to grow by buying Starwood, but their complicated stock structure — the Pritzker family has outsized voting rights — was a challenge.
There are plenty of smaller chains left, but ones like Omni and Loews would hardly move the needle. Even chains with several hundred properties that are left are mostly regional.
Hyatt though appears to be making a regional play: they’ve expressed interest in acquiring NH Hotels, the Madrid-based chain with 379 hotels in 30 countries.
Most NH (“Navarra Hoteles”) hotels are centered in Europe but they have a presence in Latin America. Their only property in the US is the closed for refurbishment. NH had acquired the Italian chain Jolly, Atron in Germany, and Krasnapolsky from the Netherlands.
On the whole the chain features some uninspiring properties, though there are also some gems. The Hesperia Mallorca Villamil for instance looks lovely.
Hesperia Mallorca Villamil, Credit: NH Hotels
They have airport hotels near Frankfurt, Madrid, Milan Linate, Amsterdam, Vienna, Brussels, Zurich, Geneva, Mexico City and more.
China’s troubled HNA Group, parent of Hainan Airlines, has sold its shares in Hilton and has been unloading other investments as it struggles to deal with nearly $100 billion in debt. At one point they couldn’t buy jet fuel. And they’ve sold their shares in NH Hotels as well, to Thailand’s Minor International has been working to acquire NH entirely in a decision set for an August 9th shareholders meeting.
Hyatt could make a counter offer, with CEO Mark Hoplamazian saying,
We believe that marrying NH Hotel Group’s strong footprint in Europe and select other markets with Hyatt’s global presence would yield a powerful portfolio of brands and network of hotels delivering compelling benefits for guests, owners and shareholders of both companies.”
The problem here of course is that while this helps them in Europe, they’d be acquiring management of many properties which may not fit well into existing brands (though they could keep current branding) and some that are less than what many Hyatt guests are used to, and it only helps them in limited segments of the world.
Still it’s one of the few medium-sized players out there. If Hyatt itself isn’t going to be acquired they probably do need to assemble deals like this — and they probably need either NH Hotels or Meliá Hotels Ias part of that strategy.
This analysis is a little off. NH properties are nice. ADR for NH is 90 EUR. Okay so that’s lower than anything in Hyatt’s system. But they’re still the nicest hotels in their respective cities. ADR for the 40 NH Collection properties is 135 EUR. That maps out to higher than Hyatt House, maybe a little less than Hyatt Centric. This is a great strategic fit.
Not sure if this a wise acquisition for Hyatt their US footprint is horrible.
Quality over quantity Hyatt, don’t dilute the brand.
I disagree with your analysis. NH Hotels are very stylish, more so than most US brands and would be a good fit.
A lot of their properties are in lower-cost cities, so the ADR comparison is a little misleading.
And their lower-end 3-star properties will help Hyatt expand in the mid-market, also a declared strategic direction.
This would give Hyatt a much better foot print in Europe and Latin America, where they have next to nothing. They’d then still need an Asia acquisition. They have way too little in the fastest growing markets…
I think it’ll be a good move and they do need to take some kind of action because they’re being left behind in terms of number of property.
I see a potential way to make everyone happy. They could acquire the brands and then require re-flagging to an existing Hyatt brand (House, Place, Centric, or even keep NH and update brand standard), which would allow them to grow without sacrificing quality. Only add the new properties to Hyatt portfolio when re-flagged, but have ownership in the interim. Give properties 5 years to convert. This may not cost the existing owners much as they could rennovate on schedule or choose to realize added Hyatt benefits at their own pace.
As a globalist, I still feel I need to keep hilton diamond as a backup as too much of the world is just not covered by Hyatt. While Hyatt Place and House are better than competitor brands, they aren’t so much better that I want to add 30 minutes to my daily commute in most cities (if even a choice). And frankly, as we have said before, there just aren’t enough benefits at these lower properties where I feel I need to be a globalist even when they are the most convenient option. Park Hyatt’s are truly amazing, but I’ve never had a bad Conrad or JW Marriott stay and I won’t sacrifice weekly comfort for marginal benefit on an annual vacation. Starwood was the logical partner, now Hyatt is left with difficult choices if they want to grow.
FWIW, Radisson may also become available, but don’t think it does much (if anything) in Europe
No reason they’d be obligated to reflag any NH properties, but some might well slot into existing Hyatt brands. Truthfully, Hyatt has so many fewer brands, they could easily add “NH” to their portfolio without confusion.
Melia might be more challenging, given that their corporate structure is more complicated. Not only do Melia manage properties, they also own/manage properties that aren’t Melia branded, like the TRYP by Wyndham in Munich (I actually learned about their structure after noticing that emails about an upcoming reservation at that property came from a melia.com email address).
I would welcome this. We stayed at several nice NH hotels in Italy. We usually vacation in Europe where Hyatt is weak.
There are quite a few nice NH hotels (I’ve stayed at several….)….but there would most surely need to be some aspects in need of upgrade–for example, the showers are Euro-terrible with showerheads on the wall and weird glass fixtures. Some of the bathrooms were just plain odd. That said, the overall quality of the stay was perfectly acceptable for the reasonable price paid. I’d welcome any opportunity to get Hyatt credit in Europe!!
As for Club Carlson….again, it’s not so hot in some areas (unfortunately, many in the U.S.)….but overseas there are some absolutely amazing Radission Blu properties (example: the best hotel in Dakar, Senegal is a very cool Radisson Blu–also check out Berlin…wow!) and some quite nice mid-level properties that could be reflagged. As for the crappy ones—sell them off once the transaction closes (without bothering with reflagging) to help pay for the gems in an increased Europe/Africa/U.S. portfolio.