Hyatt is smaller than its hotel chain competitors. So how did it get to be the most expensive? Watch the Economics of Hyatt: on.wsj.com/3xt9yNf How did Marriott become the largest hotel chain, with over 30 brands? Marriott’s CFO explains why this is just the beginning for the hospitality giant: on.wsj.com/3xhNqpb
There are certain brand standards owners have to follow in order to operate under a certain name; but yes it does become inconsistent sometimes as some owners care more about operations than others.
as a former hotel worker. the real loser here is the loyalty customers, it's literally a sign on the front door. that's it. nothing special about the hotel. use your brain, look at all hotels individually and pick what you like for a price you are willing to pay.
The quality has gone way down. I was in a Hilton recently where they were charging $50 per night for a mini-fridge - the same kind of fridge you can get for $120 from Costco, and which used to be supplied in every hotel as standard
This is why most hotels are a complete crapshoot on what you get. Very little consistency in physical product, amenities, and especially service. Breakfasts are weaker, housekeeping services reduced, loyalty recognition is greatly minimized. Not saying every chain hotel was perfect before, but ever since the pandemic and the offloading of property by the chains, the service has gone downhill at nearly every hotel I have stayed at.
polarspacebear: As the video notes, Marriott/Hilton made the decision to go "asset-lite" decades ago. The franchised hotel model dates back to the early 1970's...this was not an idea that took hold post pandemic. Your experience is not unlike any business post-pandemic...harder to find staff, etc. Not due to a dramatic shift in who owns the hotel real estate.
And overtime, the marriot, hilton, etc will slowly go down hill. A fact they acknowledge within this video. When you loose control over quality standardization, it becomes inevitable that the brands reputation looses value as well.
Not necessarily. If they go the McD's route, they can impose strict standards & plenty of brand-support (design, suppliers, advice on where/how to locate, etc). The issue is that they are *also* going the Subway route - allowing way too many franchisees in smaller markets, or in close-proximity in larger markets, such that supply exceeds demand. Outsourcing the risk in this way can be good for all parties, but you have to impose some reasonable limits.
@@mandisaw everything from your second sentence still stands true. They are just trying to sell as many of their brands to owners as much as possible. As long as the hotel is making money off royalties they don’t care. Even if margins are thin for the owner. But yeah if margins are thin for the owner, it’s harder for the owner to keep up with new brand requirements and renovation cycles which require a lot of capital at times.
I used Marriott almost exclusively for 17 years of business travel. Now that I'm retired, I've found that IHG is a much better value and the service is much more consistent. Also, as a lifetime Platinum with Marriott, I used to get upgrades quite often pre-COVID but haven't seen one since.
SPG was the Top until Marriott bought it. I got 10 years of the most undisputably amazing membership with SPG. Still got the many gifts and SPG "NO BLACKOUT"points. Today that concept is hardly doable.
When I heard the CFO of Marriott say "we are the largest, 8700 hotels in 139 countries and territories, really showing expertise around the world for what we think hospitality means", I thought this meant, you know, making a nice hotel for guests. Turns out this is left to the franchisees, and what hospitality means to Marriott is figuring out how to charge as much as "the market can bear", and setting up anti-competitive loyalty programs to stop customers from shopping around outside of their flag.
While that true, what they also have is data to tell the franchises what attracts customers in terms of what makes a customer happy with their hotel choice, amenities, room layout/style etc.
It's funny how the CEOs of the hotel companies, who make money from selling their brand, *look* like rich people; while the MCR CEO looks like a used car salesman.
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
We seem to do a whole lot of the asset light business model here in the US. Outsourcing Manufacturing, Uber , Air BNB , Hotel ownership , Franchised Restaurants , Finance , Call centers, health insurance . Capital likes to take the path of least resistance It's no wonder other countries are growing their economies. It's just more financialization here.
I work at a Marriott trust me if your service sucks its because quality of work has been destroyed. We have been reduced to so few workers we cant keep up. They made a new building where i work at . Never hired more people. Trust me it sucks to the extremes. All of our best employees that were diamond left my Marriott and found better jobs and that was in every department btw.
So, who do you think pays for those franchise fees?! Hotel prices have gone up astronomically over the last 5 years and the highest prices hikes are the Brands in this video. This is the same thing happening in Las Vegas with MGM and Caesars where they have sold their properties and are now paid to manage these hotels (again, prices have gone through the roof!).
With regards to Vegas VICI properties is the biggest casino landlord. 😊They own the buildings and MGM and others (casino operators) are tenants. Imagine being the landlord to the casino business. It’s an ingeniously profitable business model. Blackstone is getting in on the game too. With regards to Marriott, take a look at it’s stock performance.. These businesses are built for the shareholders so deploy your capital appropriately
Having worked at a hotel I can also say that the owners of hotels also hire a management company typically to staff their hotel and run it for a percentage of the revenue/profit. And a lot of times if you get awful experiences it might not be the people at those hotels but rather the terrible management and lack of or micromanaging oversight and scrutiny you’re under. The hotel industry is tough in its own way and it’s not very kind. I came from one with awful management and they were kept because the books looked good despite the work morale and culture being diminished because the management company covered it all up.
As someone who works for Hyatt, I can tell franchise hotels decrease the quality of the standars and the way employees are managed, as long as you can pay the franchise fee corporate doesn't really care.
stumbled upon this on my recommendations, and i am impressed! i think it's common to choose a hotel you are more familiar with, especially with the trust people have if the hotel has a "by x company" because you can be in the other side of the world and can trust properties that are labeled as "by marriot, by wyndham, by hyatt," and the like
I work for a best western but it's operated by a group the manages the employees of a Hilton, best Western and a holiday inn, all within 5 miles of each other
Unstated here is those employees don't work for the big brands meaning they don't get those benefits, nor the discounts that they'd normally get. Human capital expenditures drop considerably, but so do the benefit for staff.
Not only are most hotels a franchise but there are also management companies that the employees of those hotels actually work for and not the franchisee or the main name hotel.
They figured out how to ruin their brand while turning their business into nothing but a brand. Put a Marriott sticker on a Motel 6. Nobody can afford to travel anymore anyway.
@wsj Here's another intriguing story worth exploring: Service Properties Trust (SVC), which you briefly highlighted. Amid the pandemic, they recognized the cost efficiency of operating under their own flag (Sonesta hotels) and not partnering with brands or other operators. Consequently, they terminated contracts with major players such as Marriott, Hilton, IHG, and Hyatt, effectively reshaping their company virtually overnight.
@@piphastings6734 Right! An entire hotel brand born out of a company taking advantage of the pandemic to get out of contracts with the major operators. SVC required minimium income targets to be met and of course - no one was staying at hotels during the pandemic so the brands could not afford to pay these costs and thus were in breach of contract. Hope WSJ picks this up!
@@GameFuMaster true. And Hilton/a decent hotel chain’s customer care is 80% better than airBnB’s. Not higher simply because some hotel owners just DGA F.
And the brands don't own or operate the properties. They're just selling their flags for a cut of the revenue. Isn't that basically a franchise? Or am I getting the whole video wrong?
True, but Hyatt makes more than 4x more revenue than Wyndham at a much smaller scale. It's all relative, sort of like the airline industry.. Southwest airlines flies more passengers per year than United but United makes more money per year.
Hotels across brands have become too inconsistent, especially in North America. And it's unacceptable that many in the US are still serving room service in boxes which came about because of the pandemic and not returning to full tray service. It's these owners trying to squeeze every last dollar they can out of their properties.
I book Marriott because I have status though my Amex and I book them consistently for work so I can use the rewards when I am on vacation. it all checks out
This explains why the same chain, say Ramadas, from one hotel to the other can vary greatly in quality, amenities, pricing, etc. Why one location I think was lovely, I book at another and it's a dive. I have to figure out how to spot this stuff and get good ones, because price isn't it, and reviews from when I book to when I stay can change greatly. Plus I think they sometimes leave up old pics that make it look better than it is.
The absolute bane of the common person. Imagine getting a fair price or a good deal from a business with a full-time revenue manager and algorithms to outsmart you.
They know the average American is not going to do the work of finding the best price, read the fine print and do their homework more than one sitting in from of the computer. I literally spend 2 months monitoring hotel room prices in order to get an idea of the price ranges including point conversions. Who wants to do that and that's just 1 hotel.
Even gave Taylor Swift a shoutout for driving crazy prices. Most 2024 thing ever along with the grotesque tech driven drive of 'dynamic pricing' which more often than not isn't simply a demand & supply equation.
How about enforce property owners to respect brand guidelines, and elite benefits, instead of letting them run away without any repercussion? If you treat yourself as a glorified OTA, then us customers act like so. I only go out of my way to stay at Hyatt. Marriott and Hilton don’t get my loyalty.
Because the hotel can just switch brands with little business interruption. It's like amex demanding target to have lower prices if they want to accept amex cards. How well is that going to be received.
It is called sponsored news. If you want to be discussed neutrally or positively in a video masquerading as factual you have to pay. IHG doesn't use this sort of marketing.
your video such amazing, could you please explain more about the technic of your strategy if you have another video that explain your technic. Thanks in advance
As a former EDITION Abu Dhabi employee… they 100% are franchised out. To the point they tried to deflag Dubai EDITION opening night due to conflict with ownership… ownership won
Just to make this clear (the video seems to suggest otherwise towards the end): the hotel industry is highly fragmented. Most hotels are small! Even Marriott as the biggest chain only holds a relatively percentage of market share world-wide: “Based on lodging industry data, we have an approximately 16 percent share of the U.S. hotel market and a four percent share of the hotel market outside the U.S. (based on number of rooms).“ (from their 2023 annual report)
Thanks for explaining the reason behind my experience ( not a good one) in different Marriott. Believe Fairmont still manages property they put their name on, Fairmont Gold is my choice to stay, for now.
Great explainer video! I guess the hotel industry has learned from the fast food industry. What industry will follow this path next? Air travel? You operate a B737 and you get to slap a 'Singapore Airlines' on the side, if you manage it well.
Yep Marriott is winning big on Hotels branding in the South Pacific and bought hotels previously owned by Starwood Hotels and Resorts, when JW Marriott bought the brand back in 2016.
Hotel franchises put their reputation on the line while the actual hotel operator just laughs in the face of guests complaining about their falling quality and standards. This is the kind of business model that will make these premium brand slowly lose its association with luxury.
Recently at a TX doubletree Hilton a little 12 year old died in the pool bc of an exposed pipe… this explains why the mom couldn’t sue the actual Hilton company… such a sad story of something that could’ve been prevented… and just sucks that this is how they work. I’ve noticed a decline in some of the chains we frequent for vacation.
Brilliant illustration of the wealth transfer upward of the 1%, as hotel brands move to focus purely on profit generation and pass all risk down to independent operators who pay to have access to the global network and owners that shoulder all risk of construction and development
And that comes with extremely poor reviews by the hotelier magazine with all aspects of the “Hospice” metrics going down in the opposite direction. The question is WHY it is in practice still? Choose the right answer: 1) easier to get-out. 2) rooms for not having an extensive health coverage. 3) Encourage Local beauty pageants!!
Bottom line, Marriott has sold out their control of quality and good customer experience for fast growth. Short term return for investors, who cares about our reputation if it doesn't affect the stock price this quarter.
Yes and your product has suffered because of it! I’ve stayed at Marriott hotels that were on par with Days Inn. It’s very inconsistent and very telling.
The stock footage, I don't think Ritz, St Regis and Ill add in Grand Hyatt are operated by franchise. Perhaps it does have partners but I doubt its a complete franchisee
Most likely this video was created around the period when Hyatt made two significant acquisitions, notably expanding their portfolio of managed and franchised units compared to owned properties. These acquisitions were Lindner in Europe and the Apple Leisure Group, which specializes in all-inclusive resorts.
Same. I’m confused too. They even have excerpts of the interview with the CEO from the other video here but the 2% vs 50% numbers contradict each other.
This makes a lot of sense now as to why even elite member service at Marriott is so awful and so incredibly awful at specific regions. Clearly, Marriott don't care enough to make sure their most loyal customers aren't getting shafted by not getting the benefits that they are supposed to. And this explains why so many specific hotels can get away with not offering breakfast to elite members or room upgrades. 2 prime reasons to even achieve platinum and up at Marriott. The worst part is that the 3 big chains appears to be colluding in prices in big cities like paris, London. They would just raise prices together and sometimes dynamically with the dollar. Meanwhile if you look at expedia for prices outside of those 3 you'll notice significantly lower prices. While I'll still retain my Hilton business I'm dropping Marriott permanently because I doubt anything will change with them in the next 5 years.
That is caused by a different issue. In US, nearly EVERYONE is an elite member, even gold is super common. They are so easy to get through Marriott credit cards. If you want to get room upgrades and special perks, you need to have higher tiers than most people (which is at least Platinum to Titanium in US). Elite member carries more value outside US. As for London, the price is probably driven up by frequent business travelers. Because free points and free elite status. Why not!
Hotels lately suck! They all worry about saving a buck, that the quality has sugfered! Id rather stay at independent hotel than a brand name if the service and quality are there. I think its time to start a hotel brand
I doubt they feel threatened by franchises flying their hotels under different banners. This is because most of Marriot's portfolio is specifically themed and stylized. Which would make it harder for franchisees to switch sides.
there are a lot hampton inn in china, most of them are franchise hotels, which used to be a pretty bad builiding in aweful condition but the brand saved it from dying so the property owner owns the hotel but pay franchise money
The franchising strategy adopted by Marriott and others is a brilliant move that has drastically scaled their growth while minimizing risk. This model showcases how brands can leverage their reputation and systems to ensure profitability and brand consistency without the direct costs of property management.
@@TransConBrilliancegreat comparison to credit card companies. They have adopted an asset light model that allows them to make nice profits from their brand.
The big brands Marriott Hilton sell rights to use their (name) brand. It’s basically a licensing agreement. The hotel owner makes a decent living by running a very efficient business. And they are incentivized to grow by owning different hotel brands under the Marriott family. For example the same entrepreneur person (or family) might own more than one of the 30 hotel brands under the Marriott umbrella
I guess Hilton owns a much higher percentage of their hotels since they weren’t listed with Marriott and Hyatt as owning only 1 to 2 percent of their hotels.
That's what I think too and the reason why my room upgrade chances with Hilton is 80% and with Marriott it's more like 30%. Except San Diego areas where both of them are 0% in the last 7 years and I go there often.
This model does bring a lot of profit, but it only works because those big "hotel flags" are already established in the industry for a long time. They already have the data and experience for maximizing hotel performance, and they sell those data to the franchisees for a fee. This model indirectly hampers the growth of independent hotels and leaving the hotel industry to be monopolized by few players.
Great video. However I have tried for years to figure out which properties the Marriott family actually owns. Other than the two bridges office in Washington Washington DC
