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Hyatt Hotels Corporation’s Industry Summary

Industry Classification

Hyatt Hotels Corporation is one of the four major multinational companies conducting business in the hospitality industry, providing services in luxury resorts. It has 777 properties in 54 countries around the world, working in all major countries in North and South Americas, Europe, Africa, the Middle East, and China. It operates under several different names, such as the Hyatt, Miraval, Grand Hyatt, Park Hyatt, Andaz, Hyatt Zilara, Hyatt Ziva, Hyatt Resorts, and several others (“Hyatt Hotels,” 2017).

Brand distribution and trademark differentiation enable it to maintain a solid standing in residence countries. The services provided by the company include full-service lodging, select-service lodging, extended-stay lodging, and all-inclusive accommodations. The purpose of this paper is to define the industry Hyatt Hotels is operating in, provide a comparative analysis towards major competitors, and outline any government regulations and influences on the luxury segment.

Hyatt Hotels Corporation is a multinational hospitality company that operates in the Travel and Leisure sector of the hospitality industry. Namely, it works in the ownership and leasing segment of the hotel industry in both Americas, Asia-Pacific, EAME (Europe, Africa, and the Middle East), India, and Nepal (“Hyatt Hotels,” 2017).

The company specializes in luxury resorts, providing services to individual consumers, businesses, educational organizations, government officials, religious representatives, and the military. The company’s revenues as of 2016 are 4.4 billion dollars, placing it in the top four of US corporations in the Hotels and Resorts industry (“Revenue of Hyatt Hotels,” 2018). Other direct competitors of Hyatt Hotels include:

  • Marriot International, with the revenue stream of circa 17 billion dollars (“Marriott international revenues,” 2017).
  • Hilton Hotels, with reported revenues of 11-12 billion dollars (“Hilton revenues,” 2017).
  • Wyndham Worldwide (5.6 billion dollars) (“Wyndham worldwide,” 2017).

Other competitors worth mentioning include Marriot Vacations Worldwide, a branch company of Marriot International, Vail Resorts, ILG, Extended Stay America, La Quinta Holdings, and Choice Hotels International, with accumulative revenues of over 8 billion dollars as of 2016. As it is possible to see, Hyatt Hotels remains firmly in 4th place, with a significant advantage in scope and revenue over a good half of the companies ranked lower in the top-10 list, but is substantially behind the giants of the luxury resorts segment, such as Marriot International and Hilton Hotels. Wyndham Worldwide, though significantly ahead in revenues (over 1 billion advantage), is the closest competitor within Hyatt Hotels’ reach.

The three top competitors of Hyatt Hotels have three main advantages over the company. These advantages are scope, reach, and reputation. Marriot International, Hilton Hotels, and Wyndham Worldwide have more properties (over 5000 for Hilton and Marriot vs. 777 properties for Hyatt) when compared to Hyatt and operate in more countries (105 for Hilton vs. 54 for Hyatt), which explains the differences in revenue between them (“Hyatt Hotels,” 2017). In addition, the competing companies were established at the beginning of the 20th century, roughly 40 years before the apparition of the first Hyatt Hotel, giving them more time to expand and a stronger brand name.

Although most high-end hotel chains provide similar quality of service due to high competition, larger hotel chains are more exposed to risks and economic threats, due to operating in more countries (Min, 2018). Hyatt Hotels focuses more on tourist resorts and countries with a relatively strong economy. Hilton and Marriot, on the other hand, operate in nearly every country. Thus, a worldwide economic crisis, like the one that struck in 2009, is more dangerous to these companies than to Hyatt.

Size and Growth

The luxury resorts segment of the hospitality industry has been in recession since 2013 when the global economy was hit by an array of shortages and crises largely revolving around the oil crisis, instability in the Middle East, political and economic sanctions, and trade wars. As a result, between 2013 and 2017, the market share for luxury hotels in North America (largest consumer), Asia-Pacific, and China fell from 36% to 32%, and 19.5 to 18.5% respectively (“Luxury hotel market,” 2018).

However, as the world economy continues to move towards globalization, as traveling becomes more and more available, and as the standards of service keep growing up, the perspectives for luxury resorts segment continue to improve (Dogru, 2016). As of 2017, the global luxury hotel market size stands at 171.1 billion dollars a year. It is expected to grow by roughly 3.9% every year, reaching 232.2 billion dollars by the beginning of 2026 (“Luxury hotel market,” 2018).

To demonstrate this tendency, Hyatt Hotels reported revenue growth of 2.3% in 2016, and the overall revenue growth for the luxury hotel segment was at 9.1% (“Luxury hotels market share,” 2018). Hyatt’s performance doubled to 5.78% in 2017, though the first half of 2018 failed to demonstrate any significant growth (“H’s revenue,” 2018). Therefore, it can be concluded that although the industry size and growth rates for luxury resorts have recovered from the recession and are showing impressive growth rates, Hyatt is lagging behind growth, which may potentially threaten its position as one of the leaders in the luxury hotel segment of the hospitality industry.

Government Regulations

The luxury resorts segment and the hospitality industry, in general, is an area that suffers from loose government regulations. The term ‘luxury resorts’ is typically utilized towards 5-star hotels with the highest levels of service and accommodation. However, the conditions necessary for 5-star accommodations are not determined by any national or international legislative bodies (Aquino, 2015). Instead, the industry is using a self-regulating approach. Star ratings are subjective and are assigned based on individual countries’ culture, perceived levels of comfort, and traditions of hospitality.

As such, there are many non-governmental evaluation boards that operate in the luxury segment of the industry. The most widely used standards are based on Forbes’ Travel Guide, its authority being supported by Forbes’ fame, reputation, and audience (Perkins, 2017). Other standards include Green Key International and Green Global, which concern themselves with eco-friendliness of luxury hotel businesses (Deraman, Ismail, Arifin, & Mostafa, 2017). Lastly, there is the Salam Standard, which rates hotels based on Muslim-friendly criteria, such as providing space for prayer, banning games of chance and alcohol, as well as providing halal-based menus to customers. None of these standards, however, are operated by government bodies.

Government regulations regarding luxury industry are largely the same as those for hospitality services in general. Most law enforcement and regulatory bodies treat services provided to customers as contract-based. The only major regulations for hotels are fire safety regulations and food processing rules, which apply to restaurants (Perkins, 2017). In the US, hotels are obligated to comply with universal standards of care for disabled individuals.

Everything else, from room accommodation with security and quality of treatment is contract-based. The descriptions of services provided to the customer as per contract are typically vague or even left out, leaving many loopholes and resulting in lower customer satisfaction.

However, government barriers to the luxury hotel segment of the industry are typically associated with political and economic situations in any given country. Pressure on the hotel industry is typically applied in order to protect regional providers, which is often the case in China, or to facilitate asymmetrical economic warfare. As an example, foreign luxury resort providers, such as Western Best, were forced out of Crimea following its occupation by Russia and the ensuing political and economic blockade (Zverev & Sichkar, 2018).

As it is possible to see, there are major discrepancies in the quality of provided luxury services, which are largely based on companies’ own internal standards. This makes competition more difficult and results in customers being unsatisfied, especially when moving from one hotel chain to another (Zervas, Proseprio, & Byers, 2017). In order to ensure a fair playing field and protect customers, major luxury hotel companies should examine the possibility of developing a unified system of ratings and conditions based not only on the objective investigation but also on customer feedback.

Despite the recession suffered in 2009-2013 due to economic and oil crises, which left a significant impact on the world economy, the luxury segment of the industry has been experiencing growth in revenues, amounting to roughly 9% ever since 2016. All major luxury resort companies, such as Marriot, Hilton, Wyndham, Hyatt, and others, have been experiencing an increase in revenue flows. Although Hyatt has been lagging behind others, it remains firmly in the 4th place. The influence of government regulations on the luxury hotel segment remains limited, with the industry largely left to regulate itself. One of the major challenges for the industry remains the adoption of unified standards of quality of care in order to protect the customers and introduce a fair playing field for international competition.

References

Aquino, J. (2015). How hotels get their star ratings. Web.

Deraman, F., Ismail, N., Arifin, A. I. M., & Mostafa M. I. A. (2017). Green practices in hotel industry: Factors influencing the implementation. Journal of Tourism, Hospitality, & Culinary Arts, 9(2), 305-316.

Dogru, T. (2016). Development of the hotel industry in China: Mega-events, opportunities, and challenges. E-Review of Tourism Research, 13(3), 471-489.

H’s revenue growth by quarter and year. (2018). Web.

Hilton revenues and revenue growth from 2012 to 2016. (2017). Web.

Hyatt Hotels. (2017). Web.

Luxury hotel market 2018 global growth, opportunities and industry analysis forecast to 2023. (2018). Web.

Luxury hotels market share, size, analysis and forecast to 2021-global industry currant & future demand scenario. (2018). Web.

Marriott international revenues and revenue growth from 2012 to 2016. (2017). Web.

Min, H. (2018). Measuring the service quality of luxury hotel chains in the USA. International Journal of Services and Operations Management, 30(4), 1-14.

Perkins, E. (2017). What customer rights do hotel guests have? Not many. Web.

Revenue of Hyatt Hotels Corporation worldwide from 2008 to 2017 (in billion U.S. dollars). (2018). Web.

Wyndham worldwide revenues and revenue growth from 2012 to 2016. (2017). Web.

Zervas, G., Proseprio, D., & Byers, J. W. (2017). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), 687-705.

Zverev, A., & Sichkar, O. (2018). Sanctions push last Western hotel chain out of Crimea. Reuters. Web.