We’re always looking for a fun new turn of phrase here at NewDog PR and, despite the beigeing of the public discourse thanks to LLMs, we still find much to bring us delight, even on earnings calls. So to that, many thanks to David Katz from Jefferies for “economic intensity”.
Katz was on the Hyatt call early this month, discussing the company’s master agreement with Homeinns in China and we can only embrace his ability to link ‘intensity’ to such a matter. But he did (although he did acknowledge that it would be ‘lower’).
We have found the intensity across master agreements to be surprisingly high this earnings season, with Choice talking more about its decision to buy out its business in Canada earlier this year, allowing it to sell franchises direct. Time was that it was just more fun to find someone who could deal with a country, stick the relevant pin in a map and then wander off to collect the fees. At Choice, it seemed that model looked less appealing once you considered the fees lost along the way. Selling hotels direct and cutting fees lost? Maybe it will catch on.
Not yet with Hyatt, but then this is just phase one in what president & CEO Mark Hoplamazian, described as plans to open 50 new Hyatt Studios hotels over the coming years “while building a robust pipeline to fuel future growth across China”. At the end of the third quarter, upper mid-scale brands represented 13% of Hyatt’s pipeline, up from 10% at the end of 2024, and more than half of Hyatt Select, Hyatt Studios, and Unscripted by Hyatt possibilities were in markets where the group currently has no brand representation
Hoplamazian credited Hyatt Select and Unscripted as driving the group’s wider global momentum, with a company-wide NUG of 6% to 7% expected next year. Expanding more quickly in the mid range than those big marble hotels with the solid, lacquered doors is easier, it’s true, so we won’t dwell on that other than to pause for a moment and say that Hyatt sure is looking more like its larger brethren than it ever has before and isn’t that interesting. This was echoed in its expanded collaboration with Chase, where the group appears to have paid attention to Marriott’s $660m it gathered in credit card branding fees in 2024.
One area where Hyatt has stood out from the others in recent years is in buying stuff and, in between the group’s share buyback programme, it was certainly considering more of the same, with Hoplamazian interested in “strategic opportunities …in segments that are very, very profitable, in which we can have a differentiated, competitive position”.
So far, so earnings-call speak – but without the intensity – and if one was talking about 45-brand Accor, you’d be allowed a little chuckle on mute. But with Hyatt, which still occupies ‘luxury, wellness’ in many of our mental filing systems, one can’t help but think…do they mean budget?
Possibly not, because they group has not yet embraced scale at all costs. The CEO said: “We manage a bigger proportion of our total network than any of our major, larger competitors. That matters because we have very consistent delivery, very, very consistent delivery of benefits. Our elite members do not find wide variability across our hotels. Why? Because we directly control it. We are not influencing. We are actually directly controlling the delivery of benefits at the hotel level, and that matters.”
Quality control in brands? Embracing management contracts isn’t on the priority list for many, although Cheval Collection is using it to grow in the UAE. It’s easy to think that when Hyatt talks about strategic options and profits it means the lower end of the chain scales, where robots are doing such sterling work, but maybe it means the non-traditional fringes of hotel land. Residences, apartments, old folks’ homes. Intensity awaits.
