Veeren GowreaSWOT analysis of Hyatt Hotels (Hyatt SWOT Analysis)
This is a detailed SWOT analysis of Hyatt Hotels. It aims to examine the strengths and the weaknesses of Hyatt Hotels Corporation. It also aims to examine the opportunities the company should explore, and the threats it should keep an eye on.
Strengths of Hyatt Hotels
In 1957, Jay Pritzker purchased the Hyatt House motel next to the Los Angeles International Airport from his business partner Hyatt von Dehn. With his brother Donald Pritzker and other family members, he developed the Hyatt brand into what is recognised today as a big multinational family business with 974 properties in many countries (Lock, 2021). The hotel caters for all segments; however, it has mostly built a reputation of luxury brand image with the names Grand and Regency.
In 1976, due to the recession the Hyatt Corporation and Donald J. Trump partnered to buy the Commodore Hotel, now known as the Grand Hyatt Hotel. The building was facing foreclosure and bankruptcy and the new partners managed to negotiate a 40 year tax relief from the New York city council to revamp the whole area. In 1996, Hyatt Corporation purchased Trump’s half- share in the hotel for $142 million (Nevius, 2019).
Diversity and commitment to equal opportunity form important parts of the culture of Hyatt. Fortune magazine awarded Hyatt Group the rank of “Best Companies for Asians, Blacks and Hispanics” for the years 2017-2018. The numerous benefits for employees are also very well regarded according to all the employee reviews online.
Hyatt hotels generated approximately $2.07 billion in revenues from its global operation in the year 2020. However, the figure is far lower than what it generated in 2019 which was $5.02 billion (Lock, 2021). Its brand value currently stands at $4.53 billion.
Weaknesses of Hyatt Hotels
The 974 properties of Hyatt can be considered small compared to the thousands of properties which are operated by its direct competitors in the same markets and segments. The competitors open or close down a big number of hotels in one year. Likewise, Hyatt has not been able to deal with the challenges posed by new hotels and apps in the industry.
The revenue of Hyatt was US$4.68 billion in 2017, with net income of US$249 million; however, the fiscal year also saw a decrease in the total assets and total equity (Bloomberg, 2018). Hyatt was also criticised for hosting a controversial political group’s annual conference in one of its hotels.
Hyatt focuses heavily on the U.S. market. For instance, in 2017, 80% of its revenues came from properties located in the US, and 20% came from international operations. This over-dependence on the home market puts the company at risk, particularly if the US market faces economic turmoil due to domestic and global trade and political challenges.
Opportunities for Hyatt Hotels
Further expansion in the Chinese market seems very promising. Hyatt has partnered with the Chinese hospitality organisation Tianfu Minyoun to develop the Hyatt brand in all the major cities in China. The plan is to open 50 hotels in the next five years. Likewise, its alliances with American Airlines and Lindblad Expeditions (a global provider of expedition cruises and adventure travel experiences) should also help it gain new customers and increase the revenues (Hyatt Corporation, 2021).
Hyatt has been engaged in some mergers and acquisitions lately in the hospitality sector as well as in the health and wellness sector. In this regard, Miraval group and Exhale enterprises in 2017and, the hospitality groups Thompson Miami Beach and Royal palms hotels in 2016 are some examples to consider. Exhale offers relaxation, wellness and fitness services such as yoga classes, spa therapies and healing modalities, while Miraval Arizona is a wellness hotel and spa resort offering health retreats and spa vacations. This will increase Hyatt’s offerings for growing health, wellness and spa resorts segments.
Threats to Hyatt Hotels
Threat is the last element to address in the SWOT analysis of Hyatt Hotels. The competition in luxury hospitality provision is big, for example Hilton, Intercontinental, Wyndham, Accor are big players compared to Hyatt. Any development can easily be matched by them in greater scale. As a comparison, Hilton Hotels & Resorts generates $4.5Billion more revenue than Hyatt, Ritz-Carlton has 4,161 more employees than Hyatt, and IHG has 36,821 more employees than Hyatt.
Global lockdowns in 2020 were extremely costly for businesses around the world. Similar challenges in the future will certainly be disastrous for Hyatt as it had to reduce its operations in 2020.
To sum up, Hyatt is a luxury brand name in the global hospitality industry and their competitiveness resides in the fact that then indulge in more controlled expansion strategies, joint ventures and less unrelated diversification that the competitors. They are excellent in innovation. The fact that they have avoided any form of takeover attempts from the big players suggests they are here to stay as the family business which has grown into a multinational brand.
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Last update: 05 April 2021
References/Further reading:
Bloomberg, (2018) Hyatt Hotel Corporation, available at: https://www.bloomberg.com/profile/company/H:US (accessed 05 April 2021)
Hyatt Corporation (2021) OUR story, available at: https://about.hyatt.com/en/hyatthistory.html (accessed 05 April 2021)
Lock, S. (2021) Number of Hyatt hotels worldwide from 2015 to 2020, available at: https://www.statista.com/statistics/824612/number-of-hyatt-hotels-worldwide/ (accessed 05 April 2021)
Nevius, J. (2019) The winding history of Donald Trump’s first major Manhattan real estate project, available at: https://ny.curbed.com/2019/4/3/18290394/trump-grand-hyatt-nyc-commodore-hotel (accessed 05 April 2021)
Author: Veeren Gowrea
Veeren Gowrea is a lecturer in Tourism & Hospitality management. He holds an MBA in Strategic Management and MSc in Human Resource Management from the University of Wales, UK. He also holds a Postgraduate Certificate in Higher Education (PgceHE) from Birkbeck, the University of London. He works as a visiting lecturer at a number of institutes in London.
M Rahman