Hyatt Hotels Returns As Upscale's Number-One Chain

Repeating its success from last year, Hyatt Hotels earned the number-one spot in the most crowded category in BTN's annual Top U.S. Hotel Chain Survey, the upscale category. Omni Hotels, which now occupies the number-two slot, moved up a notch from last year, while last year's second-place chain, Marriott Hotels & Resorts, this year slid to number five. Of the 15 chains represented, Sheraton Hotels & Resorts also moved up significantly this year, jumping to third from seventh place in 2001. Walt Disney World Resorts tied with Sheraton for third place.

Hyatt scored highest in nine of the 13 criteria respondents were asked to judge. The chain received top scores, for example, for its ease in arranging both individual and group travel and on the overall relationship of the brand's price to value. Walt Disney World Resorts, meanwhile, received the highest scores in three criteria, including its resort meeting facilities. Meanwhile, the chain that was recognized for having the most effective corporate rate programs, Wyndham Hotels & Resorts, came in eighth place.

"Our performance in 2001 was good, considering the more reasonable expectations we had as the year progressed and factoring in that 2000 was such an extraordinary year," said Ed Rabin, Hyatt COO. "As with the rest of our sector—and the industry as a whole—Sept. 11 was a significant setback, but we've recovered to varying degrees, depending on the market."

Transient business was soft through the year, but is starting to improve. "Many corporate travel budgets are still down," Rabin said, "but as companies start to feel better about profits, they should start loosening the purse strings."

Hyatt's portfolio includes a number of large convention hotels in key cities and Rabin said the big group mix of the chain's business had held up, "with association bookings holding up extremely well." Many of Hyatt's resorts also benefited from group business, though incentive trips had lagged. "It's hard in difficult economic times for clients who may be laying off large numbers of employees to sponsor incentive trips to luxury resorts," he said.

Omni also was affected by the downturn, though president James Caldwell said the severity of the effects depended on the market. "The first quarter was fairly strong, but started trending downward from there," Caldwell said. "Some markets stayed soft, while others tracked pretty well compared with the prior year." Across the upscale sector, there were reports of widespread rate reductions by the fourth quarter. "With the new year, it's refreshing to see as much volume as we've been getting in certain markets and rates have started to recover fairly nicely," Caldwell said.

Caldwell and Rabin both are seeking a rebound by the third or fourth quarter. In the meantime, their respective chains are moving forward with projects already in the pipeline, which they said would position their brands strongly in an industry sector they view as increasingly competitive. "We're watching capital spending," Rabin said, "but some spending is warranted because when the economy comes back, you want to be ready with the best product travelers want in the locations where they want to be."

Rabin cited a new build that Hyatt is completing this spring in Jersey City, N.J., across the Hudson River from downtown Manhattan and a major expansion of its hotel in San Diego. "We're adding a 750-room tower and 100,000 square feet of meeting space to our existing hotel, which will really strengthen our position in that market," he said.

Caldwell pointed to a new San Francisco Omni, the conversion of a historic downtown office building, which opened this month, and construction of a 500-room addition that began last month on its downtown Atlanta property in a joint venture with AOL Time Warner. "Both projects are in gateway cities, where Omni wants to be strategically," Caldwell said. "In the case of San Francisco, the new hotel complements our recently acquired hotel in Los Angeles. Together, they'll be good anchors as we seek to increase our presence on the West Coast."

At Sheraton, this year's improved survey performance is a reflection of improvements made in the room product during the year. While the upgrades are still being rolled out across the brand, enough properties implemented them in 2001 to influence respondents' opinion. The strategy behind the upgrades was to give frequent business travelers, in particular, a room with more of the comfort and amenities they experienced in their own homes. At the center of the renovations is the now-signature Sheraton sleigh bed.