Hyatt Takeover

Is Hyatt A Takeover Target Or Just A Short? -

Excerpt from

  • Hyatt Hotels’ stock price has jumped 50% over the trailing 12 months
  • That is great, but there are troubling signs that the company is falling behind the competition
  • Worse, recent moves by management have alienated the one hospitality factor that counts most: traveler loyalty

This article is Part III of a look at the lodging / hospitality industry. In Part I, here, I provided an overview of the industry: the differences between owners of the physical lodging properties and the management companies that actually train the staff and do the hiring, firing, maintenance and so on. The third leg of this triad consists of the big “flags” like Hyatt (NYSE:H), Hilton (NYSE:HLT), Intercontinental (NYSE:IHG), Marriott International (NASDAQ:MAR), Wyndham Worldwide (NYSE:WYN) and Accor (PA:ACCP) SA (OTC:ACCYY) that bring the guests to the properties even though they seldom own the hotels themselves. It’s a good place to begin if you want to understand this rapidly-consolidating industry.

In Part II, here, I discussed the latest assault on hotel profitability: the rapid growth of Airbnb, VRBO, and online travel agencies (OTAs.) I concluded that most hotel owners, managers and branders were doing the right things to stay on the green side of the grass. I also recommended a hotel property owner I think is particularly well situated to survive and grow. You may find that article a valuable preamble to today’s discussion as well.

In this article I’d like to circle back to a company that I do not see as keeping up with industry trends; indeed, I see them doing a lot of things wrong. That company is the once private, then publicly-traded, then private again, and now public again Hyatt Hotels Corporation (H).

It pains me to reach this conclusion; Hyatt instituted its frequent guest program (“Hyatt Gold Passport”) in 1987, 30 years after Jay Pritzker began the company with a purchase of a motel, the Hyatt House, at Los Angeles International Airport. Jay Pritzker was a legendary dealmaker and his brother Donald a fine manager and soon other purchases of lodging properties followed.

Hyatt enjoyed good profitability as well as good growth, both domestically and internationally. I was just ending my career as a road warrior in 1987 when I chose to make Hyatt my personal first choice of flag hotels. Now retired from a large company running my own business, no corporation pays for my stays. Because of their fine properties and stellar service, Hyatt has until recently simply been my go-to-first hotel company for both business and leisure travel.

I should be clear that the actual Hyatt-branded and often Hyatt-managed hotels are not the problem.

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