Hyatt Hotels' Midmarket Gambit: From Cities to Suburbs

18.10.2024 - 16:29 / skift.com / Sean Oneill

When most people think of Hyatt Hotels, they think of either luxury hotels (like the Park Hyatt Tokyo in the movie “Lost in Translation”) or urban business hotels (where your corporation’s annual holiday party takes place).

However, Hyatt sees suburban hotels without the frills as a path to additional growth, moving beyond full-service hotels. They’re quicker to build, cheaper for owners to run, and help fill out the map in places where Hyatt doesn’t yet have a presence.

Hyatt reported a 25% increase in its select-service pipeline in the Americas over the past three years. It now represents over half of the group’s total pipeline in the region.

The company debuted new brand Hyatt Studios a year and a half ago as its first foray into the midscale segment — underscoring the group’s interest in moving “down the scale” toward more streamlined hotel concepts.

Hyatt is also fanning out from urban hubs to smaller towns. Its Hyatt Studios brand has hotels in the works in Harrisonburg, Pennsylvania; Madison, Alabama; and La Verkin, Utah.

To learn more, Skift spoke with Jim Tierney, a senior vice president of development, at this month’s Lodging Conference in Scottsdale, Arizona.

Tierney talked about two brands helping to drive the company’s expansion: Caption by Hyatt and Hyatt Studios.

Caption by Hyatt, an upscale select-service brand, has undergone a significant refresh since its launch right before the pandemic.

The revamped concept now offers increased market flexibility, a more efficient food and beverage model, and an evolved prototype design.

“We’ve made Caption more operationally streamlined,” Tierney said. “This allows us to expand into a broader range of markets with a more cost-effective model.”

With the Caption by Hyatt brand, the company has simplified its food and beverage operations. They’re responding to developers who argued that not every guest requires a [high-cost] culinary epiphany and that something closer to a continental breakfast will suffice.

Hyatt Studios is a midscale extended-stay brand with about 4,000 rooms in the pipeline and about “250 deals in various stages of negotiations.”

That’s not as strong of a pickup by hotel developers as, say, Hilton has enjoyed with its Spark by Hilton brand, which debuted around the same time in early 2023. There are already 30 Spark by Hilton locations open, with over 175 in the works, compared to no Hyatt Studios being open yet.

Yet Hyatt is a significantly smaller group than Hilton, and Hyatt entered the midscale segment much later. So it’s not fully surprising that Hyatt’s development team has taken time to find its footing.

“Nearly half of our Hyatt Studios pipeline represents first-time Hyatt owners and new markets for us,” Tierney noted.

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