Innovator Article

Global Hospitality
Hyatt Chief Hyper-focused on Brand Strength

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Distinguished Speaker • by Tim Akin

Mark Hoplamazian got his first taste of the hospitality business working the graveyard shift at the front desk of a two-star hotel while studying at the London School of Economics.

While short, that experience still shapes his single-minded pursuit of top-quality customer service as president and CEO of Hyatt Hotels Corporation. During a campus visit last spring— including a stay at Hyatt Place at UC Davis—he spoke as a Dean’s Distinguished Speaker, sharing his serendipitous return to the hotel business.

While earning his MBA at the University of Chicago in the late 1980s, Hoplamazian was introduced to Jay Pritzker, the billionaire Chicago businessman who co-founded Hyatt in 1957. Impressed with Hoplamazian’s Wall Street experience in international mergers and acquisitions, Pritzker brought him aboard to first work on a bid for Eastern Airlines amid a contentious labor dispute, then a reorganization plan for Pan-Am.

“I was at the right place at the right time, he had never hired anyone straight out of business school before,” said Hoplamazian.

He went on to become president of The Pritzker Organization, the investment advisor of the family’s business portfolio, then named to lead Hyatt in 2006.

Hoplamazian said customer segmentation is key to Hyatt’s success and strategic global expansion to 478 properties in 45 countries. The company’s subsidiaries manage, franchise, own and develop hotels and resorts under the Hyatt, Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, Hyatt Place, Hyatt House and Hyatt Residence Club brands.

The cornerstone is nurturing a company culture that puts a premium on concierge service and personal attention, Hoplamazian explained.

The goal: be the most preferred brand in each segment, not necessarily the biggest or fastest-growing. “That’s how we define being No. 1,” he said.

That approach led to a “huge fight” with Hyatt’s investment bankers while prepping for Hyatt’s IPO road show in 2009. Hoplamazian won the behind-the scenes clash. The bottom line, he said: “If you want unit growth, then don’t buy the stock. The strength of the brand is more important than growth for growth’s sake.”

The brands largely rest with Hyatt’s invested franchise owners who run more than 300 properties and Hyatt depends on for third-party capital, Hoplamazian said. Hyatt benefits by allowing franchisees latitude to manage pricing, operations and entering emerging markets. At the same time, Hyatt runs about 100 company-owned hotels and 30 other joint ventures.

“To price centrally is a bad idea. With more than 435 properties, you can’t do it effectively” he said. “The best decisions are made close to the customers. We like to keep decision making at the general manager level of each property. They carry our DNA and uphold the culture of our company.”

The global economic recession hit hard, but Hoplamazian said occupancy growth is back to 2007 levels while room rates are still depressed. He said corporate customers have become more conservative. Hyatt’s corporate bookings that used to be at 75 percent capacity three months out are now stagnant at 50 percent.

Looking forward, Hoplamazian is very bullish on China, India and Brazil. Hyatt is building a new hotel in Rio de Janeiro, and targeting Central Asia for more opportunities. He said one challenge in China’s new capitalism is a high employee turnover rate as small wage increases quickly attract workers elsewhere.

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