Strategic Directions for Growth of Hyatt Group - Math Problem Example

STRATGIC DIRECTIONS FOR GROWTH OF HYATT GROUP Prepared by STRATGIC DIRECTIONS FOR GROWTH OF HYATT GROUP Prepared for Abstract Hyatt group is one of the leading chains of hotels known for its contemporary interiors, themed restaurants, and quality. Despite being among the best, the Group has been keeping a slow paced growth until recently. But, now the group has changed its vision and is planning to expand fast. It is also working on clear distinction of its brands and wining a loyal customer base which would include everyone from a economy class customer to a VVIP. Conclusion The group has changed its strategic vision and is on a expansion spree. The group is working hard towards buying new properties to expand globally. Recommendation The group needs to follow a more proactive approach and innovative strategies to establish its brand value and win a loyal customer base. Table of Content Abstract ……………………………………………….3 Introduction……………………………………………….5 Discussion………………………………………………….5-9 Conclusion………………………………………………….9 Recommendation…………………………………………….10 Future Strategic Directions for Hyatt Group Introduction Hyatt Group is $5 billion a year global chain of hotels known for its quality, flashy styles, and atrium lobbies. Despite being amongst the best hotel groups in the world, the group has actually never kept a pace with its competitors. Even when the tourism sector had been growing by leaps and bounds, the company had preferred to keep a low profile. At a time when competitor hotel giants like Hilton and Marriot added hundred of hotels to their groups, Hyatt group have contended themselves by adding one to two at a time to their 200 hotel group. The group’s spokesperson once quoted that we have never been able to keep pace with our competitors and strategy has never been our strong point. Discussion After the death of the mastermind of the family fortune- Jay Pritzker, Tom Pritzker and his two cousins Penny and Nick shouldered the responsibility of taking the family legacy forward. But soon, in 2000, the clan began to squabble and Tom was given an ultimatum by his brother and cousins to restructure the holdings. The group lead under the leadership of Tom Pritzker plans to distribute the assets by 2011. Till the time Jay Pritzker was alive, the company ran with his philosophy that the Pritzker should not receive more than they had contributed to the society. Being a part of the competition was never his strategy. But, under the leadership of Tom Pritzker, the company’s vision changed. Tom started looking at expansion plans and Hyatt group was his first priority. Now the times have changed and the company is on a rapid expansion spree. Breaking silence, the President of the Hyatt group Tom Pritzker announced their fast paced global expansion plans. The group has 29 hotels currently under development and has recently acquired Ameri Suites, a 146 hotel chain, surprising its competitors and even the wall street journal. The Hyatt group now plans to expand its horizon and give a global competition to its rivals. With the world wide boom in tourism industry it is not strange for a group like Hyatt to get into expansion mode. According to Steven Kent, a Lodging analyst at Goldman Sachs, “These days it seems like a hotel can charge almost whatever they want for a room”. When the demand is increasing and people are ready to pay anything for a quality accommodation, it is but natural for a global player like Hyatt to plan expansion. With strategy never being a plus point for Hyatt, the group has to be very careful with the expansion plans and strategies. Especially, when the competition is high and there are already so many competitors who have their feet established in the market. The group always had been operated under decentralized control wherein for every hotel people come up with new and innovative ideas and implement them. This strategy has been group’s greatest asset as well biggest liability. Decentralized control has enabled the group to have innovative concepts for the hotels. The Hyatt groups of hotels are particularly famous for themed restaurants in place of traditional coffee shops. On the other hand decentralized control has led to inconsistency in the hotels design and management. Till recently, branding which is the most essential aspect of winning customer’s loyalty has been missing from the group hotels. There was no clear distinction between a grand Hyatt, Hyatt regency, and Park Hyatt. There were no clear distinctions- even within the company. The group now plans to bring consistency in its hotel brands with Park Hyatt on top, followed by Grand Hyatt, Hyatt Regency, and Hyatt Place. Per the head of Hyatt’s international operations, Dernd Chorengel, “Grand Hyatt should be hip hop hotels, Park Hyatt would be symbolic of sophistication and luxury, and Hyatt Regency focusing on business class”. There is much more for Hyatt group to do besides branding to catch up with the competitors. But, the fact is the group is slowly coming in pace with the competitors to establish their brand and win customer’s loyalty. The recent example of group’s glorious expansion plans is Park Hyatt coming in Shanghai, which would be world’s tallest building. The company is expanding in Middle East in countries like Afghanistan, in other countries China and literally everywhere in the world. The group has been carefully chalking out its expansion strategies. The mastermind behind the global expansion is Doug Geoga. His first step for expansion in limited category was Ameri Suites and re-branding it Hyatt place. A limited service category hotel with comfort and amenities like valet parking, room service, dry cleaning particularly for business travelers with low cost. Even if the group does not top the list currently, still its expansion plans have been paying off. Its revenue per room grew by 9 % in the US and 32 % abroad with operating profits rising to 21% and 29% respectively. Now, since the group is expanding it has to be more attentive and careful with strategy for future growth. The group needs to focus on its distribution and marketing strategies. Focusing on the target customers and marketing brand accordingly is vital. Strong online presence, convenient internet booking, tie ups with airlines and tour operators to market the hotels, direct channel advertising are some of the effective ways of reaching the target customers. Accordingly, the hotels have to be tailored to meet the standards of the target customers. The brand identity has to be very clear and specific. The customers be it the economy class or the elite class Mercedes owners, need to be very clear on which Hyatt hotel suits their needs. The customers and the group itself should be very clear on the difference between the grand Hyatt, park Hyatt, or Hyatt Regency. The marketing strategies of the group need to focus and categorically differentiate between the various brands. The group is taking specifics steps in this direction to establish the various brands as a strategy to push growth. But, this will require a clear strategic vision and proactive approach for the group to come in the top list of hotel players. Undoubtedly, the group is moving towards that goal. Conclusion Hyatt group is a global chain of hotels known for its quality and atrium lobbies. Despite, international presence and quality standards, the group is still missing in the top hotel group’s list. Until recently, the group has been following a laid back approach expanding slowly with one or two hotels in a year while the competitor hotels have been acquiring hundreds of hotels yearly. But now the company is changing its strategic vision and is out on a expansion spree. The group is playing hard to expand world wide acquiring new groups and establishing its brands. Until now, there has been no clear distinction between the different brands of Hyatt like park Hyatt, Grand Hyatt, Regency Hyatt, and Hyatt Park. But now, the group is clearly taking initiatives to create a distinct identity for all its brands and wining customer’s loyalty. Recommendations The Hyatt group, under the leadership of Tom Pritzker, is expanding fast and working hard to establish its brand identity, yet, it has to follow a more proactive approach and innovative marketing strategies to create its global presence and get a loyal customer base. By adopting strategies like tieing up with airlines, tour operators, and online & direct marketing, the group can definitely work towards being a leading group world wide. Citations Steven Kent, Lodging Analyst, Goldman Sachs Dernd Chorengel, Head of Hyatt’s International Operations Sources Conquer and Divide; Gimbel, Barney; Fortune; 10/17/2005, Volume 152, Issue 8, page175-186 Read More