Compared to many of its big brand peers, Hyatt has been slower to switch from the owner operator model to the franchised one favoured by many these days.
But it is starting to ramp things up, according to CEO Mark Hoplamazian.
“Our franchise proportion is increasing. We're increasing our franchise base in Europe, in particular, and finding more and more opportunities on franchising in some other markets, notably South America. So I believe that you'll see a growth in our franchise percentage over time. We still are dominantly a managed business but I think franchise will be a grower,” Hoplamazian said on an earnings call last week.
Less than half of Hyatt’s portfolio (on a property basis) is currently francised and the proportion is even lower in the European region. Rivals like IHG Hotels and Resorts (91%) and Hilton (70%) have a much higher percentage, according to a study by HVS.
Asset light switch
Over the last couple of years Hyatt has trodden the familiar path to many of its rivals, by selling off many of its owned assets and investing in assert light brand expansion.
In the last five years it has made around $3.8 billion from the sale of owned hotel real estate, net of hotel acquisitions, investing around $3.6 billion to buy three platforms: Miraval, 2 Roads Hospitality and Apple Leisure Group.
“The owned real estate that we sold was estimated to need on a run rate basis approximately $130 million in capital expenditures per year while by comparison, the three platforms that we acquired, which are predominantly asset light, collectively needed only $40 million of capital expenditures in 2022,” Hoplamazian said.
Hyatt also revealed n the call that it currently has two assets on the block, the newest one for sale being in the luxury space.
“We remain focused on realizing the most attractive valuations and securing durable long term management or franchise agreements, and we remain highly confident in achieving our $2 billion sell-down commitment by the end of 2024,” Hoplamazian said.