Hyatt Tells Investors It’s Getting Better At Charging More — Here’s How Guests Will Feel It

While the market didn’t love what Hyatt had to say on its earnings call, that their total rooms aren’t growing as fast as they’d hoped, I’m much more interested in picking up the tidbits that matter to customers.

They are working to expand the footprint – the high end is their bread and butter margins, but they’re really looking to fill out their geographic reach with midscale (Hyatt Studios) – and they’re investing heavily in technology to extract more revenue from each hotel and guest. For Hyatt, AI “primarily relate[s] to revenue opportunities, not costs.”

• Hyatt is getting better at pricing rooms. Hyatt has replaced its central reservation system, implemented OPERA Cloud and installed a new revenue-management system in the past 18 months, and has now layered AI over it.

  That lets them identify revenue opportunities at individual hotels; optimize the rates they charge; look at group booking inquiries and score the profitability of each; integrate revenue from a event bookings across food and beverage and rooms to make more strategic decisions; and optimize vendors and some operating costs.

  Hyatt claims market share gains and owner profits from this and the new property management system costs owners 40% less per room.

  This also means faster changes to room pricing, they aren’t going to underprice rooms as frequently but they also might discount more at times. They think they can figure out when to charge more, hold back room inventory for group business, and generate upsells. Booking refundable reservations and checking rates frequently matters more.

  

• World of Hyatt membership is growing much faster than room inventory. World of Hyatt reached approximately 69 million members, up 17% year over year. Most membership growth is really just for access to ‘member rates’ (they’re bribing people to join, on its own this doesn’t mean people actually want to be members of World of Hyatt).

  But it’s notable that Hyatt added 3.9% to its room inventory during this period, so membership grew four times as fast as inventory. They also have 55% more members per hotel than large competitors. World of Hyatt is better even though I’m frustrated by things like erosion in customer service and points devaluation.

  And while this doesn’t speak to the number of people with large points balances or elite status, it correlates with pressure on award inventory and upgrades. That serves are pressure and justification for higher redemption pricing.

  Hyatt keeps telling investors that World of Hyatt as a competitive differentiator – and that is true – as well as the center of its “network effect.” So while we’ve seen devaluation, I don’t think we’d see high level dramatic change (even if they’re surveying benefits changes many wouldn’t like).

  

• The credit card deal is becoming more important. Hyatt’s 10-Q shows loyalty program deferred revenue increased from $1.6 billion at the end of the year to $1.8 billion on June 30, up 12% in six months. It’s largely cobrand card revenue coming off the late 2025 Chase renewal.

• Hyatt’s strong performer continues to be luxury. Luxury and leisure have led Hyatt’s performance in every region for eight consecutive quarters. In the past quarter luxury revenue per available room was up 6.6%, and average daily room rates were up 5.9%.

  Park Hyatt room rates were up 6.9% and Unbound Collection up 12.9%. Luxury rates in China were up 11% and Hyatt describes high end guests as exceptionally resilient. It’s no surprise that Hyatt is raising redemption rates.

  I’m not as confident that luxury stays as strong, by the way. I’m not saying that it won’t. But at United and Delta last quarter premium was no longer growing faster than main cabin revenue. I think there’s a lot of risk in the global economy. We’ll see!

  

• Hyatt’s footprint is growing rapidly over the next several years. They have 154,000 rooms under new and conversion hotel contracts, which is 41% growth on its current 377,886 rooms. Two-thirds of that is international and two-thirds is full service (a huge reversal from where Hyatt was a decade ago when there was a big focus on limited-service).

  

  In the near-term, though, Hyatt projected reduced growth for 2026. More than half of this year’s openings are in the fourth quarter and more than 60% of those are luxury, lifestyle or full-service projects. Many projects are slipping because Hyatt has learned that conversions to Hyatt Select and Unscripted require greater property improvements than they expected. That means Hyatt is imposing real standards on conversions – not everyone does.

• Franchised low-end properties will accelerate. More than two years out we’re going to see more franchising in the ‘essentials’ category. That means relatively fewer Hyatt-managed, full service hotels as the low end brands grow (the same play Marriott and Hilton already executed, but from a smaller and more premium starting point).

  

• Hyatt’s all-inclusive strategy wasn’t a strong performer revenue per available room fell 1.2%. Cancun is hurting. All inclusive package revenue per room is expected to be below last year in the third quarter. The Dominican Republic and west coast of Mexico is still strong though (and Hyatt thinks higher rates elsewhere will push travelers to Cancun, driving rates back up).

• Hyatt Grand Central New York stays around longer the sale of the property for redevelopment is no longer expected to close this year. We don’t know when the hotel will close, but it’ll stay around longer than had been expected.

  

World of Hyatt is still a better program than Marriott Bonvoy, Hilton Honors, and IHG One Rewards for a premium set of properties worth staying at and strong benefits.

I’ve found customer service cuts frustrating, an ever-increasing set of exceptions to delivering like confirmed suites disappointing, and their points to be worth less. And I still expect tweaking of benefits and further redemption price increases (leaning into the new 5 price levels per award category rolled out this year).

Since their success so clearly rests on World of Hyatt differentiation – both for premium customers and for cobrand card revenue – I expect these changes to be more marginal than transformational. In other words, I still expect World of Hyatt to be a better program next year and even in five years as more lower-end franchised smaller market hotels add into the portfolio.