Corporate group meetings in hotels and resorts may bounce back more strongly than might be assumed, according to Mark Hoplamazian, president and chief executive officer of Hyatt Hotels.
The commonly held view is that the holiday and leisure market will recover first followed by trips taken by individual business travellers, with so-called “group” activity – offsite business meetings and such – trailing along behind.
Mr Hoplamazian, however, said that group business may return “more purposefully and in a more meaningful way” than has been widely anticipated to date.
The comments came as Hyatt reported fourth-quarter and full-year earnings for 2020. The net loss for the quarter was $203 million against $321 million of income in 2019. RevPAR decreased 69%.
The net loss for the year was $703 million against income of $766 million. The net loss per share was $6.93 against earnings per share of $7.21 in 2019. RevPAR decreased 65%.
Referring to 2020, the company said occupancy was consistent with third quarter trends, driven, it said: “primarily by favourable leisure transient demand, particularly on weekends and holidays in the fourth quarter. Business transient and group demand continued to be muted.”
But Mr Hoplamazian also said that interest in group bookings was picking up. Companies and other organisations, he indicated, want to engage in business development which has been stymied by the health worries and lockdowns. He said that meeting organisers were increasingly keen to re-establish: “the essential human component of getting back together.”
He added that clients were becoming increasingly wary of costs that come with digital interaction. He acknowledged that digital gatherings generally incur lower travel expense but said virtual conferencing required outlays on audio visual equipment and what he termed “helpdesk” issues – tech support for participants.
He acknowledged the emergence of hybrid solutions which combine personal and virtual interactions. He also emphasised that for Hyatt said group bookings were a relatively small part of the overall business
Hyatt diffused the negative impact of the 2020 numbers with expressions of confidence in the company’s ability to grow in size. Net growth in rooms in the fourth quarter of 2020 compared the same period in 2019 was 5.2%.
Mr Hoplamazian said of 2020: “Amidst a backdrop of challenging operating fundamentals, our net rooms growth was strong, demonstrating the strength of our brands. We opened 72 hotels and entered 27 new markets. Our teams also executed new signings to maintain a pipeline representing over 40% growth of our existing hotel rooms in the future."
Hyatt is not paying a dividend in respect of the fourth quarter. It paid 20 cents per share in the first quarter of 2020. Last March, however, the company suspended its quarterly dividend and all share-repurchase activity.
Are we seeing the end of the Zoom boom? Mark Hoplamazian, the Hyatt chief, certainly sees the limitations of video conferencing. Of course, he would say that, wouldn’t he? He is a hotelier after all.
He’s not the first to reflect on the frustration that often comes with the snaps, crackles and pops that punctuate conversations held down the line. The technology that facilitates online communications, meanwhile, is only likely to improve. The eye-catching aspect of Mr Hoplamazian’s analysis is in the way it is prompting fresh thoughts about how Hyatt operates and how it hopes to emerge from the pandemic. Necessity, as Mr Hoplamazian observed on 18 February, is the mother of invention.
Cynics may roll the eyes on hearing a hotel exec extolling the virtues of “truly differentiated” products or revolutions of “form and format.” Others may say that hotel guests – and practically everyone else – most want the comfort of a return to recognisable normality.
Yet Hyatt, and the rest of the industry, has to think about how it might have to change. The risk that hotels (and airports) go the way of canals – now used solely for leisure – is real enough.