This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.
While Hyatt’s cheap award chart makes them a favorite among points enthusiasts, the biggest complaint about the Chicago-based hotel chain has always been that they have a relatively small footprint. Despite smaller partnerships with Miraval and Mlife, Hyatt clearly felt they needed to make a bigger move, possibly in response to Marriott gobbling up Starwood to become the world’s biggest hotel chain.
Earlier this week, after much speculation, Hyatt announced that they were acquiring Two Roads Hospitality for a base price of $480 million. Hyatt will be taking over the management contracts for many of Two Roads’ 85+ properties, allowing them to enter 23 new markets. Two Roads owns and operates such brands as Alila, Destination, Joie de Vivre and Thompson. The deal is expected to close later this year, and the program hopes to integrate the new hotels into World of Hyatt in 2019.
This won’t be as complicated as Marriott having to recategorize 6,500+ hotels into a new award chart, but Hyatt will still have many decisions to make: whether to offer full elite benefits at these properties, what award category to assign to each, etc. Hyatt hasn’t yet shared their plans for these new properties, but we can make a few educated guesses about how things might shake out.
Before diving in, there are a few Two Roads properties that most likely will not be joining World of Hyatt. These include hotels like the Aloft Charlotte or Hilton Denver Inverness which already belong to another hotel chain (Marriott and Hilton, respectively). While they could theoretically be rebranded, I don’t necessarily expect that to happen.
The Value of New Markets
One of the most exciting elements of this deal is Hyatt’s ability to gain a presence in 23 new markets (in addition to diversifying their offerings in more established markets). Expanding the properties affiliated with a program is rarely a bad thing, but if you’re a business traveler who struggles to remain loyal to Hyatt given its limited footprint, this may not help. Many of these new markets are remote, boutique vacation spots. While great for leisure travelers, they’ll do nothing to address a business traveler’s concerns about Hyatt’s global reach.
Take the Alila Yangshuo for example. Located in a remote part of Guanxi province in southern China, the sweeping mountain views and beautifully designed property are sure to provide for a relaxing getaway from the hustle and bustle of daily life. Meanwhile in Chongqing, one of China’s more populous cities, Hyatt has exactly one hotel (a Hyatt Regency). IHG has eight hotels in Chongqing, Marriott has five and Hilton has four, running the gamut from affordable to luxury.
The same thing can be said of the Alila Villas Koh Russey. While this property is a great addition to the Hyatt portfolio, it’s the only hotel Hyatt will have in Cambodia. This means any Hyatt elites traveling to Phnom Penh for business or looking to explore the country instead of relaxing on a secluded island will have to turn to a different hotel company to do so.
Of the 100 or so properties listed on the Two Roads’ website, about 80% of them are in North America. Even without knowing which specific hotels will end up flying the Hyatt flag, almost every property fits neatly into one of three categories:
- Coastal cities (e.g. New York, Washington, Los Angeles and San Francisco)
- Ski destinations (e.g. Colorado and Utah)
- Beach or other vacation spots (e.g. Hawaii, Southern California and Arizona)
So somewhere in here, between Asia and North America, there should be 23 new markets that Hyatt is expanding into, right? Well…technically, yes, but it’s not nearly as exciting as it sounds. One of these new markets would be the sleepy town of Stowe, Vermont, home to just over 4,000 residents. Granted all of Vermont is new to Hyatt, but this is a single property in the entire state. Not the size and scale I picture when I hear “new markets.”
It’s not just Stowe Mountain; a good number of Hyatt’s “new markets” come in the form of a single property in a small, out-of-the-way place or a different city in Colorado’s clump of ski resorts, not a bold push into an entirely new area.
It’s hard to be upset with more choice in a loyalty program, and there are definitely positive aspects for Hyatt customers. In markets like New York or San Francisco, you’ll have more properties and rooms at which to redeem your points, which is never a bad thing. That being said, I’m just not convinced that these “new markets” are as exciting as they sound on paper.
Another major question is whether World of Hyatt elites will enjoy their full package of benefits at these new hotels. Some of the most valuable benefits for Hyatt elites, specifically top-tier Globalists, are free breakfast and space-available suite upgrades.
Unlike Marriott/Ritz Carlton, Hyatt has historically been generous with elite upgrades to suites, even at some of their most luxurious properties (like the Park Hyatt Paris Vendôme). It was easy enough for Marriott to institute policies specific to just Ritz Carlton hotels, but Hyatt just acquired 5 different brands. Beyond the tech nightmare of integrating them all into Hyatt’s reservation system, the added complexity of carving out different policies for different brands seems like more trouble than it’s worth.
I expect the same will be true of free breakfast and club access where available, although I’m less confident here. Ritz-Carlton properties and Design Hotels (a legacy SPG brand) have never offered free breakfast to elite members. One important thing we learned from the Marriott merger is that not all property managers were happy with the policies corporate pushed on them. Many of the boutique properties Hyatt is acquiring, especially in far flung parts of Indonesia and China, may see an influx of Hyatt elites after this merger closes. To placate the properties and make them excited about joining Hyatt, I could see Hyatt waiving free breakfast for elites. If they go down this route, I hope that they would offer something to Globalists, such as a higher category suite upgrade or some type of food/beverage/points welcome amenity to make up for it.
How Will Hyatt Assign Award Categories?
The last important question in assessing the value of this deal for World of Hyatt members is how Hyatt will map these new properties to their existing award chart. For reference, Hyatt free night awards cost the following amount:
|Category||Points Per Night|
As is the case with most loyalty programs, some of the best value redemptions come at the very top and very bottom of the chart. TPG values Hyatt points at 1.8 cents each, meaning that a Category 1 redemption only “costs” $90 and a Category 7 redemption “costs” $540.
Hyatt has been incredibly judicious about its top tier, with only 15 properties falling into the Category 7 pricing level, including the aforementioned Park Hyatt Paris and a TPG favorite, the Park Hyatt Sydney. Even the Park Hyatt Maldives is only a category 6. Let that sink in: one of the most picturesque and aspirational hotels in the entire Hyatt portfolio can be booked for just 25,000 points a night, or the equivalent of ~$450 based on TPG’s valuations.
If a property like the Park Hyatt Maldives falls below the program’s highest tier, then it’s entirely possible that these new acquisitions will also find their way into lower categories. That being said, there are a few properties so beautiful that it’s easy to make a case for them to be designated as Category 7.
The Alila Villas Uluwatu, shown below, consists of 65 villas, all with private pools. Rates often start at $750 or above for this Balinese heaven, and if any property was going to make it to Category 7, it would be this.
There are two other Alila hotels in the Bali area: Alila Ubud and Alila Seminyak (shown below), both I would imagine will end up as Category 6 properties. They are stunning hotels in an expensive destination, but since Hyatt has set the bar for Category 7 so high, I don’t expect these to surpass it.
Back in the US, things get a little more interesting. Hyatt has in some ways boxed itself into a corner in a market like San Francisco. The most expensive properties in the current Hyatt portfolio in the city are a Grand Hyatt and Hyatt Regency; both fall into Category 5, requiring 20,000 points for a free night. Hyatt is adding eight new San Francisco hotels with this acquisition, and while some of them are fairly nice, I don’t expect Hyatt to price these newcomers above their own legacy hotels. Take the Hotel Vitale, an upscale property in a great location. I expect it to end up as a Category 5 in the World of Hyatt program. While you could make a case that this expensive market requires a higher designation, I don’t see Hyatt elevating it above the two legacy properties.
Another hotel that caught my eye was the Motif Seattle, which looks colorful and quirky yet still luxurious (sort of like a W that grew up). Rates here are relatively cheap, rarely breaking $200, and they’re well below the $250-$350 that some of Hyatt’s other Seattle properties charge, including the Grand Hyatt and Hyatt at Olive 8. Since both of those properties fall into Category 3 in the World of Hyatt program, I expect the Motif to end up as a Category 3, costing only 12,000 points per night. This would be another great option to use your Hyatt free night certificates in Seattle.
Of course, it’s also possible that Hyatt could create an entirely separate award chart with these new properties. However, I’d say the chances of this are highly unlikely. The initial press release included the following verbiage (emphasis mine):
“Hyatt plans to integrate Two Roads brands into the World of Hyatt program in 2019, expanding opportunities for World of Hyatt members to earn and redeem points across more leisure-focused stay options.”
I may be reading too closely into the language, but integrate makes me think that they will be a part of the existing program. However, only time will tell if that’s the reality!
The addition of ~85 new properties to the Hyatt portfolio is incredibly exciting news, but it doesn’t really address the core concerns of Hyatt’s small global footprint. While they’re shoring up markets on the two coasts of the US and adding a few unique, exotic Asian destinations, they simply don’t have the presence of larger chains like Marriott, Hilton and IHG.
A lot remains to be seen about this acquisition, including how Hyatt handles elite benefits at the new properties and what award category they be assigned. I’m optimistic that Hyatt will price these new hotels fairly, giving us some more mid-range hotels to choose from in big cities and some interesting new boutique options. I’ll be watching eagerly to see if any of these new properties, especially some of the villa locations, end up in Hyatt’s exclusive Category 7 level.
More options for using your points is always a good thing, but I’m not yet convinced that this deal will have a material impact on the average World of Hyatt member, as the geographic location of these new properties is pretty limited.
Featured image of Alila Yangshuo courtesy of the hotel.
Know before you go.
News and deals straight to your inbox every day.
NEW INCREASED OFFER: 60,000 points! With great travel benefits, 2x points on travel & dining and a 60,000 point sign up bonus worth up to $1,200 in value, the Chase Sapphire Preferred is a great card for those looking to get into the points and miles game. Here are the top 5 reasons it should be in your wallet, or read our definitive review for more details.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- Chase Sapphire Preferred named "Best Credit Card for Flexible Travel Redemption" - Kiplinger's Personal Finance, June 2018
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 60,000 points are worth $750 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards