Hyatt emphasizes flexibility amid risky expansion into franchising

Hyatt has expanded its franchising efforts over the past three years, focusing on leisure markets through acquisitions such as Apple Leisure Group. The company plans to open 250 extended-stay Hyatt Studios properties, half of which will be in new markets. Last year alone, World of Hyatt added 8 million members.

Despite these expansions, traditional full-service brands like Grand Hyatt and Hyatt Regency have not been a recent focus. Instead, growth is driven by franchised limited-service properties and resorts. This shift towards luxury comes with significant risks; maintaining high standards is crucial in this segment where customer experience directly impacts brand reputation.

Historically, Starwood was known for holding hotels accountable by addressing customer complaints effectively. However, there have been instances where Hyatts have faced criticism for practices such as adding unauthorized fees or failing to honor loyalty benefits.

Hyatt remains more focused on high-end segments compared to Marriott, Hilton, and IHG. Seventy percent of its rooms are in luxury or upper upscale categories with higher average daily rates than its competitors. These higher rates support greater investment in customer loyalty programs.

The challenge lies in offering more than basic amenities; premium properties must provide enriching experiences that justify higher prices and distinguish them from short-term rentals.