to 734 as some of the existing accommodation is upgraded to create suites. Despite the upgrade plans, the hotel is in good shape. Currently, a six year renovation programme is nearing completion, encompassing improvements to all the guestrooms and the hotel’s two Japanese restaurants. In addition to its commitment to Mexico, Hyatt has already committed to a development in Rio, which Hoplamazian has said will be ready for the 2016 Olympics. With the success of LodgeWorks
in mind, Hoplamazian said he is looking for growth opportunities in Europe. “We certainly are paying attention to and looking for opportunities there. The tumult in the market has
not generated any opportunities for us yet. But we continue to look for opportunities, especially because our presence in Europe remains relatively modest. And there are a lot of attractive markets into which we would like to further expand.” Hyatt has also announced an
internal reorganisation, running three regions – Asia, the Americas, and Europe/Africa/Middle East – supported by a Global Operations Centre. “We’ve covered quite a lot of
ground over the last few years and established a great foundation for our future,” said Hoplamazian. “As we look forward, we recognise that our business mix will shift over time as we open hotels in our pipeline. We also recognise that the velocity of the changes in consumer behaviour is increasing. There’s a large increase of consumers and business travellers in places like China and India. And that will change the profile of our customer base over time.”
HA Perspective: Hyatt reckons the growth rate of its pipeline
has been 15% or so over the last few years. And it is not being shy about pointing out that it is its willingness to use its balance sheet that has helped to deliver that. The Mexican acquisition is but
the latest example. But Hyatt is equally keen to point out that it will recycle the capital deployed in this deal once it has finished its three year renovation and repositioning. It is not saying too much
though about recycling capital in the properties it has owned for longer. If it wants to maintain momentum, it is likely to need some cash from these at some point. Right now, however, Hyatt is firmly in the asset right rather than asset light camp. The other notable feature of the conference call was the emphasis being placed on the management changes. The company is keen to emphasise how it is operationally focused, something of a departure from its rivals who continue to be brand-focused. The incoming CFO, Gebhard
Rainer, is an old Hyatt hand with extensive operations experience. And this again plays to Hyatt’s willingness to be an owner. Improving operations at hotels are a key driver of growth. While other big players talk about revpar, the emphasis is far more on fees. As a significant owner, Hyatt is
far more leveraged to the revpar cycle and it matters more to its bottom line that operations are improved. CEO Hoplamazian says what
matters for earnings growth is improving operations and adding additional Hyatt branded hotels. There is no mention of fees. Hyatt is clearly setting out its stall differently to its rivals.
Sales and an upgrade at
De Vere De Vere has completed the first two of four intended hotel sales, as the company prunes its less attractive properties from its portfolio.
The Royal Bath in Bournemouth and De Vere Daresbury Park in Warrington have been sold to Britannia Hotels, yielding GBP20m. Also up for grabs are the Grand Harbour, Southampton and the University Arms, Cambridge, with De Vere saying it will invest the proceeds in developing new hotels. In a separate announcement, recently arrived Village CEO Robert Cook revealed where some of those proceeds are to be spent. Plans to upgrade a series of deluxe rooms at De Vere Village hotels have been made public. The superior rooms, which
will borrow the airline (or cruise liner) moniker Upper Deck, were unveiled at the Chester, Swansea and Solihull hotels, ahead of a portfolio-wide refit over the summer that will upgrade 20 rooms per hotel. The rooms get a better mattress
and bedlinen, Sky TV, a Bose sound dock, Starbucks coffee and guests will have three months membership to an online club offering special deals on partner products. Cook commented: ”With UpperDeck we are re-inventing the wheel! Across the industry, and even before the economic downturn, we saw the downgrading of the upgraded status, especially in the midmarket segment. Cost cutting to improve profitability
or just to keep your head above water has in most cases prompted the stripping back of the basics in room amenities. Meanwhile, the sector is not seeing much by way of new investment and little is on the horizon.” “So, with all the benefits that
already come with staying at a Village hotel I could see a great opportunity to offer, to both corporate and leisure guests alike, a must-have upgrade that has real benefits, both during the stay and for another three months afterwards if they maximise the benefits of the UpperDeckClub website. Through UpperDeck I can give an enhanced customer experience and more room product choice whilst still driving ARR and profitability.” “I’ve always thought that the
real potential of Village was waiting to be realised. I also believe that every weekday night away from home is begrudged so it must be as good as, if not better than, staying at home. What I want to achieve in UpperDeck epitomises my hospitality philosophy: great service, great rooms and, above all, an amazing stay.” Also promised are new hotels
developed in the company’s “Black Box” style already seen in the most recent additions to the portfolio.
HA Perspective: The De Vere restructuring is now well under way. While the company may talk up its plans to invest in hotels, first call on the cash proceeds will no doubt be Lloyds, its principal lender. That is in no way a criticism
as it is hugely to Lloyd’s credit that a company with as troubled a capital structure as De Vere is still be allowed to make capital investments of any sort. The bank has clearly decided that
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