One-On-One: Hyatt Hails Hardy Future For Buyers

By Bruce Serlen / April 02, 2000

One-On-One: Hyatt Hails Hardy Future For Buyers

Hyatt Hotels Corp. president Scott D. Miller, who took the helm Jan. 1, talked with BTN hotel editor Bruce Serlen about the central role the travel buyer plays in Hyatt's future.

BTN: How important are the new travel management technologies for Hyatt to remain competitive?

Scott Miller: Very important. At each of our 116 properties in the United States, Canada and the Caribbean, we're doing everything we can to bring technology to bear for the benefit of the buyer and the traveler. Our goal is to make it easier for individual travelers to book and then, once at the hotel, to conduct their business using the latest technologies, both the Internet and others.

BTN: What's happening at Hyatt regarding single-image inventory?

Miller: We now have it fully deployed in all our properties. From any point of entry into Hyatt's reservations system, we are able to provide travel buyers with a full and complete understanding of the available inventory--and the associated rate for that inventory--in all of our hotels on a real-time basis.

BTN: Where do you stand on providing buyers with full folio data?

Miller: We're now working on establishing electronic means for transferring all of the expense information to buyers so they'll be able to conduct electronic expense accounting and analysis. We realize it's a big priority for many buyers. Consequently, it's a big priority for us. It's something we think really adds value, something that will make dealing with Hyatt that much easier. We're working to allow our corporate partners to receive their folios via e-mail and are aiming to have the system in place by the end of the year.

BTN: Many buyers would like to see direct links to the hotel so travelers can book online, though at the negotiated rate. How close is Hyatt to being able to offer this?

Miller: We're definitely getting to the point where travelers, using a logon code, can identify their company name and be able to pick up their corporate rate in booking rooms directly on the Internet through our Web site, Hyatt.com. We're aiming for the end of the year to offer this too. Buyers then will be able to derive the full advantage of their corporate rate and get credit toward their volume commitments.

BTN: What's Hyatt's position on in-room high-speed access--both wired and wireless systems--so business travelers can access their e-mail?

Miller: We're experimenting with three--soon to be six--hotels with various in-room Internet access opportunities. In most of our hotel rooms, we have two-line phones with a dataport. We're now exploring direct high-speed access through a variety of providers. Our experience, however, is that the technologies are still a bit cumbersome because they often require an ethernet card. It's not simply a matter of taking your PC from your desk and plugging it into one of these high-speed in-room providers. There's also not the pickup you would expect. In hotels in San Antonio and Austin, Texas; Arlington, Va.; and Bellevue, Wash., near Microsoft's offices--locations where you would expect a greater preponderance of high tech travelers--we're really only seeing between 3 percent and 6 percent of the rooms elect high-speed access. The hard wiring of the infrastructure within the hotels is clearly the biggest consideration here for providers. We're rapidly approaching the time when a wireless Internet solution will be available.

BTN: Are there other technology advances you're pursuing that are of interest to travel buyers?

Miller: Our greatest focus today is Hyatt.com, making that Web site more robust in terms of the information it provides and making it easier to use from a booking perspective. In terms of enhancing the individual traveler's use of the site, in the not-too-distant future I see the traveler being able to call up different hotels and get descriptive videos. It's all coming very quickly.

BTN: What's Hyatt's position on last room availability?

Miller: Last room availability is a negotiable item for each client, absolutely. However, we continue to move away from providing it unless the client's volume warrants offering it. Obviously, it is something difficult to be able to guarantee, but we do offer it. We don't provide guaranteed availability.

BTN: What support is Hyatt giving the corporate sales effort?

Miller: In addition to having sales people at each property, we have national sales offices across the country. In these offices, we have people who specialize in individual business travel. So it's a matrixed, coordinated effort at both the national and local levels. In certain instances, two people will coordinate one account. One of Hyatt's great advantages is having a single-image inventory that we can manage continually.

BTN: Is getting clients to meet the volume estimates spelled out in the agreement an issue? Have you had to cancel or adjust negotiated rates because of lack of compliance?

Miller: I don't know that we've found it to be more difficult recently, but certainly it is an issue. We manage it property by property and on a market basis. We do try to keep track of where our clients are and work with them. We continue to improve the implementation of point-of-sale booking tools. It's an area where we would like to continue to refine our relationships. Also, we'd like to make the process more transparent technologically, so people really know on a real-time basis where they stand.

BTN: Are clients increasingly trying to negotiate on the basis of total hotel spend versus solely room night spend?

Miller: Not as much as you might expect. Our preference is clearly for room night expenditures because it is a known quantity. And actually, we find most of our clients prefer that because it is known and predictable as opposed to establishing quantities that may be more difficult to predict and achieve.

BTN: What kind of amenities do buyers want to negotiate along with rate (or have waived in place of rate concessions)?

Miller: In the negotiated process, different things are important to different buyers. Accordingly, all of the services and amenities a hotel can provide come under this category at different points in time. Health club and spa access fit one broad category of client. Other clients are interested in Internet access, telephone surcharges, F&B discounts of one sort or another, continental breakfasts and the like. After all, we are in a service business, we are selling a commodity that has a number of attributes. We appreciate that in large volume accounts this is a process of negotiation. We listen to our clients and try to be as responsive as possible.

BTN: In gateway cities particularly, you may be sold out on any given night. What kinds of issues does this present in terms of clients meeting volume commitments?

Miller: Like many of our competitors that have invested a tremendous amount of money and time in revenue management systems, we have tried to drive the components that balance the demands of our best customers with our inventory allocation. Ultimately, in working to provide the inventory to the longest stay we hope to avoid the single night sell outs and the peaks and valleys associated with that. It is an issue, no doubt about it. But as we develop history and as we predict the events in a city at a given time, we're able to manage our way past this the vast majority of time. I'd be lying though to say we manage our way past it all the time. We certainly do the best we can. Technology and experience coupled together will improve our performance.

BTN: Do you have a prototype "guest room of the future?" What would such a room be like?

Miller: We were one of the first companies to offer a business plan room at a fixed additional cost including all the services a hotel can provide that a business traveler would want. These services include no charges on local calls, 800-number calls or credit card calls, complimentary continental breakfast, large desks, printer/fax/copier machine in the room, 24-hour access to the business center and the like. The popularity of these rooms will continue. Interestingly, however, as technology advances, I think there's a question mark as to how much support the hotel will provide and how much customers will show up with in their briefcases. As we move more and more to a wireless environment, it may be that a large part of what customers demand of the hotel, in terms of meeting their business needs, is simply a quiet, well-lighted space. Most of what they need may well be in their computer, which they bring with them and which connects wirelessly.

BTN: Many of your competitors are busy building brands at different price points to capture all of a client's business. Hyatt seems to have resisted this approach. Do you see this business strategy changing?

Miller: Certainly for the foreseeable future, we're defining our segment of the business as the upscale market. It's the market we know best, the one where we know how to deliver the best value proposition. By contrast, we don't feel we understand the extended stay or mid-price market or the other markets some of our competitors have chosen to pursue. The stock market recently hasn't given a great deal of credit to the value propositions at the multi-brand companies--nor to the synergies that theoretically were going to occur from this strategy. In fact, many of these companies are now working to separate out the brands and have them managed individually. We feel vindicated. These companies seem to recognize that you can't have one combined sales force, that you can't market different brands to the same customer in the same way. This is one man's view. But for us, we've defined a market niche that we understand. We're going to invest all our time and energy in improving our performance in that niche and aren't likely to pursue others.

BTN: What about the recent growth in the Park Hyatt brand?

Miller: My comments on branding notwithstanding, we will create a couple of categories of hotels within the upscale brand. Park Hyatt, which we view as a five-star brand in the major urban gateway cities around the world, will be an increasing focus for our company. In fact, we will begin to market that brand somewhat separately from Hyatt Regency and Grand Hyatt hotels since it's now reached somewhat of a critical mass. Right now, we have about 20 Park Hyatts worldwide. They're likely to be 300 rooms or less. We expect we'll continue to focus on delivering a level of service in gateway cities where we can derive the rate and occupancy necessary to warrant a Park Hyatt. One instance of a new build is the Park Hyatt Chicago, which will open in the next 60 days. The project includes a 45-story residential tower on top of the 22-story hotel.

BTN: How do you distinguish between the Hyatt Regency and Grand Hyatt hotels? Will they be marketed as distinct brands?

Miller: The majority of hotels in the domestic chain are branded Hyatt Regency. That really is the mainstay of our business. In several instances, where we have multiple hotels in a gateway city, we've used the Grand Hyatt name and in most of those instances these are positioned as a bit upscale from the Hyatt Regency. In our international company that has absolutely been the case. The Grand Hyatts are major urban, large hotels, 600 to 700 rooms, and they do have a more upscale quality. We'll differentiate the Park Hyatt brand going forward, but the rest of the hotels will continue to be marketed as they have been.

BTN: Boutique business hotels seem to be coming into their own in many gateway cities. What do you make of this development?

Miller: It is a trend. The hotel industry is an intoxicating business for a lot of people. I think we will always have participants in our industry who are looking to craft something thematically or locationally or decoratively unique. However, that really isn't where Hyatt is positioning itself. We aren't looking for properties that are trendy. We are a mainstay business and leisure travel hotel company. We're not likely to get into the boutique business.

BTN: Given your background in development, what can we look for in terms of new Hyatt business properties--either new builds or conversions--in the next 12 to 18 months?

Miller: Last year, we opened a Park Hyatt in Toronto. This year, we added the Stanhope to the Park Hyatt portfolio in New York and will add the Park Hyatt Chicago that I just mentioned. In addition, this year Hyatt will open new hotels in Calgary, New Mexico on an Indian reservation between Albuquerque and Santa Fe, Philadelphia, Pittsburgh and St. Lucia in the Caribbean. Under development are properties in Cleveland, Naples, Fla., and Chesapeake Bay, Md., outside of Washington, D.C., among others. So we have a lot of activity underway.

BTN: Are there particular areas of the United States where you see opportunity for Hyatt?

Miller: With this list, we have certainly satisfied some of those distribution shortfalls, places where we may have been under-represented. As I look across the country today, we're initiating a project in Seattle, where we would like to have greater representation. Certainly, we would like to have greater representation in New York. Even with the addition of the Stanhope, we believe there is more room for us there. Plus, there are some cities that we would like to be in, such as Portland, Ore., and Salt Lake City. We will continue to grow both looking at certain strategic locations such as these, and opportunistically as possibilities present themselves.

BTN: What would you say are the advantages of a hotel company having multiple properties in one city? Is it a matter of critical mass?

Miller: It has less to do as a trend from the hotel company's perspective than it does with demographics of the local environment. In New York, for example, there are really three or four different markets that one hotel company in the same category classification of hotel can satisfy simultaneously. There is a financial downtown market, there is a midtown market, an uptown market and so on. Each of these can represent a viable alternative for us and some of our competitors.

BTN: What is the growth picture like for Hyatt outside the United States?

Miller: Hyatt International is probably growing every bit as quickly--if not more quickly--than the domestic company. As the economy becomes more and more global, we are working in closer and closer alignment with Hyatt International. As we've discussed, we're working to brand the Park Hyatts on a global basis. Over time, we suspect this same trend will happen with the other categories.

BTN: Likewise, what is your strategy regarding the acquisition of other hotel companies?

Miller: Anything is possible. As we sit here today, we have no plans to acquire other companies that fit within our category. However, we are interested in growing and, if we can grow on a portfolio basis, that has a great degree of desirability for us.

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