Report on Hyatt Hotel Business Analysis

Question

Task: Prepare a report on Hyatt Hotel business analysis within 3500 words?

Answer

1.0 Introduction
1.1 Overview of Hyatt Hotel business analysis
Hyatt Hotels and Corporation is one of the American multinational or international hospitality companiesheadquartered in Chicago. The corporation is seen to manage a range of luxury and business hotels around the world. It is one of the known hotels in Singapore operation its business with world class hospitality service. The brand has hotels around the world in different names such as Grand Hyatt, Park Hyatt, Miraval, Hyatt Regency and others. Since 2018, Hyatt is also known to partner with selected properties such as small luxury hotels in the world (Hyatt 2020a). The other two known international hotel groups that act as competitors to Hyatt International are Marriott and Hilton.

Hilton International is yet another most recognized hotel of the world through their innovative approaches and facilities. There are more than 586 Hilton hotels and resorts in 85 countries that shows its global presence. It serves both business and luxury travelers with its world class facilities (Wsj2020). The hotel is headquartered in Virginia and operates its hotels in different countries from this region.

Marriott International is yet another international hotel that holds one of the most powerful portfolios with 30 brands operating in 131 countries. The hotel is headquartered in Maryland and ranked at 33 among the 100 best companies in Fortune (Bethesda 2020). The company is known to serve all kinds of travelers coming from around the world. It has entered recent development activities such as disruption of competing hotspots, acquisitions and others.

1.2 Purpose of the Report
The purpose of the report is to conduct a Hyatt Hotel business analysisand resorts in comparison with two of its competitors in international hotel brands such as Marriott and Hilton hotels. Further, it will point out weaknesses and issues through Hyatt Hotel business analysis that the organization needs to think of and suggest some strategic recommendations to overcome the issue.

1.3 Key Issues

• There is huge competitive pressure and rivalry from well-known brands like Hilton and Marriot.
• The market presence and number of rooms are very less compared to other known international hotels.
• There is huge threat from legal and environmental regulations of the economy.
• Hyatt lags behind financially over the years compared to international hotels.
• Huge pressure from customers that has the power to switch to any other hotels according to their choice.

2.0 Hyatt Hotel business analysis: Business Environment
2.1 PESTEL Analysis
Political- Singapore is seen to have one of the region’s most politically stable countries with a point of 1.51 in 2018 (Theglobaleconomy 2020). The economy also offers great business freedom with 92.8 point, which is highly supportive for a business to operate (Heritage 2020). This shows that Singapore offers a highly stable and supportive climate for Hyatt hotel to grow in the Singapore economy where it holds several of its branches such as Grand Hyatt, Orchard and others.

Economic- the labor cost in Singapore has increased from 99.5 point in July 2019 to 112 points in Jan 2020 (Tradingeconomics 2020). Further, GDP per capital in Singapore has seen to fall from $66188.779 in 2018 to $65233.282 in 2019 (Worldbank2020). These indicators shows that it will become challenging for Hyatt to operate in Singapore with increasing cost of human resources and low demand from locally.

Social- among all the South East Asia it is seen that Singapore has one of the highest living standards with expenses in necessities and luxury. In relation to hotels it is seen that Singaporean prefer to spend their time searching for hotels over their mobile and usually look for 4 and 5 star hotels (Kayak 2020). This is a high opportunity for luxury hotels like Hyatt in Singapore.

Technological- As per the Hyatt Hotel business analysis, the infocomm and communication technology growth in Singapore is one of the key enabler for all kinds of sector and has helped in raising productivity and transforming operations such as finance, manufacturing and services (Stb 2020). The knownsmart hotel technology is used by hotels such as information and cyber security and data analytics and management.

Legal-the hotels operating in Singapore need to comply with the requirements of the Hotels Act such as gain Certificate of Registration from the Licensing Board and a Hotel-keeper’s License (Sso 2020). This means that it would be a challenge for Hyatt to comply by these regulations to continue operating its business in Singapore effectively or to expand in the economy.

Environmental- one of the most primary environmental regulations in Singapore is the Environmental Protection and Management Act to dealwith the environmental problems. Moreover, there are other acts as well such as Carbon Pricing Act, Energy Conservation Act and others (Chun 2020). It is challenging for Hyatt Hotel business analysisto comply by all the laws and legal need of the economy while operating their business to avoid legal issues.

2.2 Modified 5 Forces Analysis
The industry analysis helps in determining the opportunities and threats that the hotel and hospitality sector offers to the companies operating in it in the long run (Cheng 2013). There are various factors that impact the companies in the industry.

Threat from new entrant- the threat to new entrant in this industry is low, especially for the five star or luxury hotels. This is because on the global basis it is seen that there is high capital costs and a high fixed cost (Cheng 2013). The Hyatt Hotel business analysis signifies that this makes it difficult for the new hotel entity to invest such a huge amount of cost on different operational areas initially as they plan to enter the industry to compete effectively with the existing luxury hotel brands such as Hyatt hotel, Marriott Hotel and Hilton Hotel.

Bargaining power of customers- the customers possess high bargaining power in the industry due to high level of competitors in the sector. Moreover, there are few buyers that focus on bulk purchases of hotel rooms and exercise bargaining power such as tour operators, domestic and international airlines and corporations. This is because the customer groups face zero switching cost to shift from one hotel to another depending on their choice from three star, four star or five star hotels (Uçmak and Arslan 2012). Moreover, the availability with various kinds of competitors serving differentiated service and concentrated amount of leisure travelers also increases their bargaining power of the buyers because it give rise to price sensitivity among the customers.

Bargaining power of suppliers- Herein Hyatt Hotel business analysis, the suppliers in this industry have moderate power to influence the cost of supplies. This is because the suppliers such as labor and experienced trained personnel can exert bargaining power and charge high for their differentiated expertise. However, in relation to other supplies such as equipment and products for the hotel the suppliers have low bargaining power because these supplies can be gained from many suppliers and getting a contract from luxury hotels is the aim of the suppliers even at high cost (Uçmak and Arslan 2012). Thus, luxury hotels like Hyatt faces moderate bargaining pressure for their supplies.

Threat from substitute- the Hyatt Hotel business analysisshows low threat from substitute products. This is because hotel industry is not threatened by substitute products except at the time of recession when people choose to travel nearby as a substitute destination and take lodge or other options to stay instead of hotels (Cheng 2013). This shows that luxury hotels like Hyatt, Marriott and Hilton does not face threat from substitutes while operating in the sector.

Competitive rivalry- the intensity of the rivalry in the hotel sector is highly dependent on the differentiation of products and low switching costs. It is seen through the Hyatt Hotel business analysis that the rivalry from competition is high in hotel industry due to large number of hotels serving similar service to the customer. Many hotels also offer differentiated and high quality service at low price compared to others. This makes rivalry intensive in the industry. Large number of international hotels such as Hyatt, Marriott, Hilton and others including domestic luxury hotel makes the rivalry intense. Moreover, there are huge economic, strategic and economic barriers that makes exit difficult and retain competition in the sector.

3.0 Financial and Industry Specific Indicator Hyatt Hotel business analysis
3.1 Analysis of Key Financial Indicators
There are number of financial indicators that help show the position of the company in a market such as net profit, gross profit, revenues, liabilities and others. the below table shows the financial indicators of Hyatt Hotel business analysisand in comparison shows the financial position of two other international hotels such as Marriott and Hilton International based on those key indicators.

Table- Financial Indicators
Sources- (Hilton 2020) (Bethesda 2020) (Hyatt 2020)

From the financial indicators of Hyatt Hotel business analysis it is seen that the other two international hotels such as Marriott and Hilton Hotel has performed well compared to Hyatt. The net income of Hyatt after deducting all its cost of goods sold, administrative expenses and other spending has been very less compared to Hilton and Marriott (Statista 2020). However, the current ratio of Hyatt is better than the other two international hotels. Hyatt Hotel business analysisshows that Hyatt has more liquid asset and are in the position to cover all its short term liabilities. On the other hand, Hyatt Hotel has a less amount of asset compared to other two international competitors even though it has very less liabilities (Hilton 2020). However, Hyatt has been performing quite poorly compared to other two hotels as seen indicators like net income, revenues and EBITDA.

3.2 Analysis of Industry Specific Indicators
The Hyatt Hotel business analysis signifies that the industry specific indicators that help in analyzing the performance of the hotel in these years and the areas it needs further improvements are rooms, cost per occupied room, room occupancy rate, increase in number of rooms and market penetration index.

Table- Industry Indicators
Sources- ((Statista, 2020), (Statista, 2020a) (Statista, 2020b) (Statista, 2020c) (Statista, 2020d) From the data based on the Hyatt Hotel business analysis it is seen that the hotel lag behind the other two international hotels in various performance indicators such as number of locations, rooms, room occupancy rate and revenue per available room. This shows the hotel has many opportunities of expansion and rethinking their business strategies for being competitively strong. There are regions of expanding the locations and hotels in many other regions and increase the presence compared to two of its competitors (Bethesda 2020). Moreover, there is also need to increase the number of rooms so that it can have the chance to earn more revenues and improve financially.

4.0 Appraisal of the Analytical Models
4.1 Strengths and Weaknesses of PESTEL
From the Hyatt Hotel business analysisof PESTEL factors it can be seen that there are various strengths and weaknesses pointed out by the model in relation to Hyatt Hotel and the way it will impact the hotel.

Table- Strengths and Weaknesses of Pestle
Source- Author’s creation

4.2 Strengths and Weaknesses of Five Forces
The five forces of industry clearly show the extent to which the hotel faces threat in the hotel sector and its position in it. Moreover, it forms the basis for further development of strategies to attract customers and keep itself strong also in front of its customers.

Table- Strengths and Weaknesses of Porter’s Five Forces
Source- Author’s creation

4.3 Strengths and Weaknesses of Financial Analysis
The financial evaluation under Hyatt Hotel business analysis shows the biggest strengths and weakness of the hotel on the basis of its two competitors that is Marriott and Hilton and helps in giving the basis for further areas of concern.

Table- Strengths and Weaknesses of Financial Analysis
Source- Author’s creation

5.0 Summary of Findings
5.1 Key Issues
From the above Hyatt Hotel business analysisit can be seen that there are various areas of issues that Hyatt might face from the external environment, from industry and from its financial position. These issues obtained through Hyatt Hotel business analysis need to be overcome through strategic development for placing Hyatt as a competitively strong international brand.

• There is huge competitive pressure and rivalry from well-known brands like Hilton and Marriot.
• The market presence and number of rooms are very less compared to other known international hotels.
• There is huge threat from legal and environmental regulations of the economy.
• Hyatt lags behind financially over the years compared to international hotels.
• Huge pressure from customers that has the power to switch to any other hotels according to their choice.

5.2 Evaluation of Issues and Prioritization
From the above Hyatt Hotel business analysisit is seen that Hyatt faces issue from various areas and one of the most important them is competition. Competitively Hyatt Hotel is seen to lag behind due to its inability to perform in various areas such as financially, competition, industry related factors and others. These issues identified through Hyatt Hotel business analysis make Hyatt competitively weak over time and also offer future opportunities. Hyatt is seen to lag behind in terms of market presence as well as room availability, which makes the hotel face more issues. From all the issue that the hotel faces the most important one that needs urgent consideration is lack of market presence that the hotel has compared to Marriott and Hilton. The table below shows the issues based on priority and urgency of strategy development.

Table- Strategic option
Source- Author’s creation

6.0 Strategy Recommendations
6.1 Identification and Justification of Two Strategic Options
The two strategic option that Hyatt Hotel business analysisshould take up to overcome its most important issue that it is facing that is lack of market presence are:

• Take up expansion strategy with acquisition as market entry option.
• Redesigning a differentiated sustainability strategy of Hyatt.

The two strategic options under Hyatt Hotel business analysis that have been suggested will help Hyatt to expand their market efficiently and attract more customers easily. This is because acquisition of small hotels in a new market will help Hyatt to give an idea about the new market, its customers, suppliers and the ways to attract customers (Damoiseau et al. 2011). Moreover, revising a new sustainability strategy will help the hotel to be competitively strong along with positioning itself the most responsible hotel in the world. As per the Hyatt Hotel business analysis, these two strategies will not only help Hyatt hotel to increase its market presence, however, it will also help solve other issues such as protect the hotel from legal pressure, increase customer base and improve it financially and competitively. Being sustainable is one of the most important strategies for hotel sector today to place itself as a responsible brand and attract more customers. Thus, these two strategic options will help in solving all kinds of issues in different priority area.

6.2 Evaluation of Strategic Options (SAF)
The two strategic options will be evaluated based on suitability, acceptability and feasibility.

• Take up expansion strategy with acquisition as market entry option.

Suitability- the strategic option is highly suitable for Hyatt Hotel business analysis. The strategy is capability suitable because the hotel is capable to acquire small hotels in new market with its financial ability and brand recognition.

Acceptability- the chances of strategic failure is low because of market knowledge of the acquired hotel. This will make the strategy highly acceptable by the stakeholders due to its low risk and high chances of return.

Feasibility- the brand has high employee and expertise to make a strategic expansion in a planned manner, moreover, the hotel is making financial gain with operation margin of 24.7%. This makes the strategy highly feasible for the bank ((Hyatt 2020).

• Redesigning a differentiated sustainability strategy of Hyatt Hotel business analysis.

Suitability- the strategy is environmental suitability, which is a need of the company to protect itself legally.

Acceptability- the strategy will help make the hotel get a responsible image and attract more customers and revenue. This makes it acceptable by the stakeholders due to high chances of return.

Feasibility- the hotel already maintains a suitability division and manpower that can implement this strategy effectively and this makes the strategy feasible.

6.3 Brief Implementation Plan for the Best Option

Table- Implementation Plan
Source- Author’s creation

7.0 Financial Modelling
Financial Indicators identified through Hyatt Hotel business analysis

Table- Financial Indicators Prediction
Source- Author’s creation

Industry Indicators

Table- Industry Indicators Prediction
Source- Author’s creation

References
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Chun, J, 2020. Environmental law and practice in Singapore: overview. [online] practicallaw. Available at: [Accessed 29 July 2020].

Damoiseau, Y., Black, W.C. and Raggio, R.D., 2011. Brand creation vs acquisition in portfolio expansion strategy. Journal of Product & Brand Management.

Heritage, 2020. Singapore. [online] heritage. Available at: [Accessed 29 July 2020].

Hilton, 2020. Hilton Reports Fourth Quarter and Full Year Results. [online] hilton. Available at: [Accessed 29 July 2020].

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Statista, 2020c. Occupancy rate of Marriott International hotels worldwide from 2010 to 2019, by region. [online] Statista. Available at: [Accessed 29 July 2020].

Statista, 2020d. Occupancy rate of Hilton Worldwide Holdings Inc. hotels from 2012 to 2019. [online] Statista. Available at: [Accessed 29 July 2020].

Stb, J, 2020. SMART HOTEL TECHNOLOGY GUIDE 2019. [online] stb. Available at: [Accessed 29 July 2020].

Theglobaleconomy, 2020. Singapore: Political stability. [online] theglobaleconomy. Available at: [Accessed 29 July 2020]. Tradingeconomics, 2020. Singapore Labour Costs. [online] tradingeconomics. Available at: [Accessed 29 July 2020].

Uçmak, F. and Arslan, C., 2012. The impact of competition conditions on new market entrants in Istanbul hotel industry: an analyse by using five forces of competitive position model of M. Porter. Procedia-Social and Behavioral Sciences, 58, pp.1037-1046.

Worldbank, 2020. GDP per capita (current US$). [online] worldbank. Available at: [Accessed 29 July 2020]. Wsj, 2020. Hilton Worldwide Holdings Inc. [online] wsj.Hyatt Hotel business analysis Available at: [Accessed 29 July 2020].