Hyatt Hotels has lost its MGM and Small Luxury Hotels of the World (SLH) partnerships in the last eight months. But I don’t think it needed either anymore.
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MGM, SLH, Are MIA
In mid-July last year, MGM announced it was ending its relationship with Hyatt and moving its partnership to Marriott Bonvoy. That transition was completed in September of 2023. In the last two weeks, Hilton announced its partnership with SLH which was also an indication that it had ended its deal with Hyatt as well.
While it hasn’t been made public, some could speculate that two different issues are at play.
One is that it simply may overestimate the value its members will bring and the frequency with which it will select those partner brands. In the case of MGM, the properties included premium properties like the Bellagio, and the Delano, but also the MGM Grand, and Luxor among others. That did bring excellent coverage to Hyatt and across a variety of price points. It’s possible that MGM felt Marriott’s far larger reach would put more heads in beds and it probably isn’t wrong about that.
In the case of SLH and its 500+ boutique hotels, rates were typically far higher than other Hyatt hotels on a cash basis, but for points, many of them were considerably higher than Hyatt peers, which won’t drive conversions. That said, American Airlines is the world’s largest airline (depending on the convenient category selected) and seems to be happy continuing its cross-promotional campaign with Hyatt. As we all learned recently, American Airlines will shed any relationship that costs it more than it thinks is necessary.
Second, Hyatt management holds the brand in very high regard, maybe too high. When Starwood Preferred Guest was looking for a buyer, Hyatt came in with an objectively better offer than Marriott. However, its preferred shares were a sticking point the Pritzker family was not willing to re-evaluate and SPG was forced to take a lesser deal. Rather than double Hyatt at the time, Marriott added the St. Regis, Le Meridien, W, and Westins (along with an awful lot of Sheratons) to the mix. While that deal is more than a decade old, Hyatt’s senior management may have shown their hand that they overvalue the company and MGM and SLH thought differently of what it brought to the table.
Regardless, both have sought larger homes today. It’s also possible that Hyatt didn’t need them anymore.
Why They Were Necessary
Hyatt has always been small amongst the major hotel chains throughout the world. Its footprint in Europe has historically been poor. Until the last few years, the chain had just one property in Italy, and none in Spain. That’s changed some but not in a significant way. A decade ago, Hyatt added to its New York footprint and increased its size to 8(!) properties in or around the New York City metro. Today it’s got 45, Hilton has 63, and Marriott has 223.
Hyatt claims to have 1,350 properties, Marriott nearly 8,700, and Hilton more than 7,500. Choice and Wyndham teter toward 10,000, IHG a little over 7,000. Many of those properties are in areas where Hyatt simply doesn’t want to compete, but other areas they certainly do, Italy and Spain are prime examples.
With MGM, Hyatt’s footprint in Las Vegas was an impressive list of properties up and down the strip with a variety of price points and service levels. Without MGM, the chain has just three, two are Hyatt Place hotels (one off the strip) and the Rio. However, unlike other examples where Hyatt had zero properties in a given location, there is some presence and a Hyatt customer doesn’t have to completely shop outside the brand.
SLH gave Hyatt the added numbers it needed to make sure it had a presence everywhere. However, they were primarily premium properties which again aligns with Hyatt’s goals. The chain was late to the Select Service game, only adding it first Hyatt Place in 2006. It sees itself as a business hotel and premium chain and SLH delivered coverage while maintaining its premium ADR (average daily rate.) The chain went from less than (10) all-inclusive Hyatt Ziva and Zilara properties throughout the Caribbean to buying Apple Leisure Group with more than 100 worldwide.
Mr. And Mrs. Smith To The Rescue
IHG had partnered with a hotel website called Mr. And Mrs. Smith (MMS) which curated 1,500+ partner hotels all vetted by the brand. MMS properties also receive extra benefits for booking through the site, much like Hyatt Privé. Hyatt bought that brand 10 months ago and was clear in its opening press release that it intended to integrate Mr. and Mrs. Smith properties “in time, we look forward to bringing World of Hyatt members direct booking access to even more rewarding stays around the globe.” Just as SLH was an affiliation for independently-owned properties, so too is MMS. Hyatt intends to stay asset-light and not own its own hotels but simply manage branded properties or affiliate with others through its loyalty program and sales arms.
SLH did not include all 500+ properties in the relationship with Hyatt. It’s unlikely they will with Hilton as well. In fact, at launch there were fewer than a quarter of SLH hotels that became eligible for World of Hyatt participation. How easy is it now for Hyatt to have the same conversation with MMS hotels and add some of those to the mix under the same type program? In fact, on a percentage basis, it could be far less successful than it was with SLH and capture just 16% of MMS properties to have a larger footprint than it did under SLH.
For those who suggest Hyatt “lost” the SLH deal, I’m not so sure. It’s possible that SLH shopped the deal and Hyatt looked at its portfolio and decided it wasn’t going to compete or bid up its position. I could be wrong, but logically, it doesn’t make sense for Hyatt to pay a premium for SLH when it would likely pay far less to MMS properties. It also has the potential if it got full buy-in from MMS hoteliers (it won’t) to more than double the bookable and earnable locations on Hyatt.
Conclusion
Hyatt’s loss of MGM is still a massive devaluation for World of Hyatt loyalists wishing to visit (or attend a conference) in Sin City. But it may not have been overly lucrative for the brand. In the case of SLH, for the moment, it’s a terrible position for Hyatt fans, but if MMS is able to step in, it could be a massive uplift instead.
What do you think?
I stayed at several SHL properties under Hyatt and I will miss that partnership. Hilton is no Hyatt. Hyatt has a premium feeling and I was treated very well in all those properties as a Globalist. Now, let me say that being a Hyatt Globalist did not change anything. In Europe, breakfast is usually included in the rate so no perks as Globalist. Upgrades at boutique hotels are rare and not as obvious as in big hotels. Every room is unique so hard to define what an upgrade means. Now, it was great to get nights at the Hyatt program in small towns where no other hotel chain is available. Also, I love when you stay in a small boutique hotel where the only thing “Hyatt” happens behind the scenes. You are still staying in a boutique hotel but getting points. That is the best of both worlds for me. Last but not least, some of these hotels have rates above Park Hyatts so being able to use points to book is a great redemption. Now, one thing that does not match is the word “small” on SHL and Hilton. They do not belong together.
@Santastico – I was staying at The Plymouth in South Beach (review coming) when this story broke, an SLH I booked through Hyatt. They honored my Explorist benefits as if I were a Globalist and even if they do with Hilton, the points prices will be unhinged. But I am hopeful that Hyatt just replicates its partnership with MMS properties and on a larger scale. It could actually be a net positive. For all we know, SLH might have said “now that you intend to integrate MMS, we don’t feel our agreement is exclusive and don’t want to compete within the partnership.” Which would be fair enough. And Hyatt would probably say, “Thanks for the memories.” Because they aren’t going to pass up the MMS opportunity which could be monumental for the brand.
Every SLH property website I checked said they do not honor Hyatt elite benefits; as a Globalist, that was a deal-breaker; so I never stayed at a SLH.
As I mentioned in my post above, at least in SHL properties in Europe, I didn’t really miss any Globalist upgrades. Breakfast was included, parking was free, there was really nothing to upgrade on the room and I didn’t need late checkout so it was perfect for anyone with or without status.
Rio Vegas is not World of Hyatt participating at this time. The latest update I received from WoH on the issue was not super encouraging about when or even IF it will be World of Hyatt participating: “there are currently no updates on the potential integration of the Rio Hotel & Casino with World of Hyatt. Please be assured that if the hotel decides to move forward with integration, you will be promptly notified. “ Enjoy those Hyatt Places in Vegas