Hyatt Acquiring Standard International, Expanding Multiple Brands

Hyatt is acquiring Standard International, the parent company of The Standard and Bunkhouse Hotel brands. The deal is expected to close in late 2024, at which point these properties will be integrated into Hyatt platforms and join the World of Hyatt program. Hyatt is paying a base purchase price of $150 million, with the potential for an additional $185 million over time as more properties are added to the portfolio.

This is an asset-light purchase, including management, franchise, and licensing contracts for 21 open hotels, with approximately 2,000 rooms. Hyatt anticipates that stabilized annual fees associated with the base purchase price will be around $17 million, potentially rising to $30 million as more hotels are added.

The Standard Hua Hin, Thailand (Source)

For those unfamiliar with Standard Hotels, it is a “lifestyle” hotel brand known for nightlife and a vibrant atmosphere. It’s not exactly a luxury brand but rather a “hip” brand. Standard Hotels has properties in locations such as Ibiza, London, the Maldives, Melbourne, Miami, New York, and more. Bunkhouse Hotels also boasts a portfolio that includes properties like Hotel Saint Cecilia in Austin and Hotel San Cristóbal in Baja California.

Historically, Hyatt has faced challenges with not having as large a footprint as competitors like Hilton, IHG, and Marriott. The company has been working to address this by acquiring other hotel groups, including Two Roads Hospitality (Alila, Thompson, and more), Apple Leisure Group (Secrets, Dreams, Zoëtry, and more), Mr & Mrs Smith (essentially a luxury travel agency), among others.

Hyatt Forming New Dedicated Lifestyle Group

While this acquisition may not directly impact guests, it’s notable that Hyatt will form a new dedicated lifestyle group headquartered in New York City. This group will be led by Standard International’s Executive Chairman, Amar Lalvani, who previously led global development for W Hotels before partnering with André Balazs on Standard Hotels.

This new group will leverage Hyatt’s operational and loyalty infrastructure while assuming distinct leadership across key functions, including experience creation, design, marketing, programming, public relations, restaurants, nightlife, and entertainment. The group will be composed of staff from both Standard International and Hyatt.

The Standard High Line, NYC (Source)

We find this to be an interesting development, given that Hyatt is based in Chicago, making the decentralization of many functions an unusual move. We’re unsure whether Hyatt wanted to retain talent unwilling to relocate to Chicago, or if Hyatt believes it’s more fitting for its lifestyle brands to have offices in New York.

We’ve been informed that more details will be shared in the future, so it’s not entirely clear if this move will be specific to this acquisition or if other Hyatt lifestyle brands will also relocate offices to New York.

Is This a Positive Development?

We are fans of Hyatt, as much as one can be a fan of a for-profit, publicly traded travel brand, without appearing to be company spokespeople. We believe that Hyatt makes more of an effort than other major hotel groups, and the World of Hyatt program sets the brand apart from its competitors.

The Standard Ibiza (Source)

We appreciate the focus Hyatt leadership has on expanding the brand to become more competitive globally. However, this expansion seems to be occurring primarily through the acquisition of small portfolios of properties, leaving us with mixed feelings.

On one hand, we generally believe that more options for earning and redeeming points, along with taking advantage of elite perks, are beneficial. We also recognize that organic growth can only happen so quickly, so these kinds of strategic investments are often the best way to fuel rapid growth. This is especially true in the current environment, where high-interest rates may deter developers from pursuing many new-build properties.

On the other hand, we can’t help but feel that Hyatt’s brand portfolio has experienced significant inflation, making it difficult even for engaged customers to keep track of the various brands. Hyatt now has approximately 30 hotel brands.

The Standard Bangkok (Source)

For example, Hyatt has 10 different all-inclusive brands. Could someone explain the differences between them all? We can barely name a handful, and distinguishing between them is even more challenging.

However, we feel that Hyatt’s focus on luxury is only partial. While many of Hyatt’s recent acquisitions have been for upscale and upper-upscale properties, we’re seeing limited growth in true luxury brands. Even the luxury properties that are opening aren’t exactly “flagship” locations.

The Standard London (Source)

Yes, we’re pleased about the new Park Hyatt London and Park Hyatt Marrakech, but both of these seem more like “better than nothing” additions rather than true flagship properties for the brand, based on their locations. We would love to see Hyatt acquire one of the major, non-publicly traded luxury hotel brands, though we acknowledge that this would be a costly endeavor.

Conclusion

Hyatt is acquiring Standard Hotels, and the deal is expected to close by the end of 2024, at which point these properties will join the World of Hyatt portfolio.

Hyatt has been growing significantly through brand acquisitions. While having more World of Hyatt properties is positive, in an ideal world, we’d prefer to see more growth within existing portfolios rather than just the addition of small new brands.