Ángel NavarretePhotographs
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Accessing the reception of a hotel with the vice president of the chain is still curious. Smile, call the client by name, accompany him until he has marked the floor in the elevator... Javier Águila, vice president of Hyatt and president of Inclusive Collection, the resort business of the American chain, frequently comes to Madrid, although he does not usually stay at the Thompson Hotel, property of his company, from whose top floors you can perfectly observe the time on the clock of the historic Telefónica headquarters on Gran Vía. Of Catalan and humble origin, Águila is, today, the Spanish of highest rank among the large hotel chains in the world and is recognized as the right hand of the president, Mark Hoplamazian, with 20 years in office. His career at Hyatt, however, spans only five years, but he has managed to take advantage of his previous life in the world of private equity, growing through acquisitions. Today his challenge is to make Hyatt a hotel company more focused on resorts and a new way of understanding luxury.
Now that we are in this hotel and with these views, how do you see this Madrid that has exploded on a residential and luxury tourism level? 5-star hotels are being built, which also reserve part for apartments with all kinds of services, real estate prices are skyrocketing...
The branded residence is something that has existed for many years in the main world capitals where let's say it was an almost intrinsic part of building a luxury hotel, because it is a way of financing its construction. But then there also had to be a demand and interest in living in that city or in having a secondary apartment on the part of the so-called high-net-worth individuals [the ultra-rich] who live in various parts of the world and can spend a few million to buy a second residence. Madrid, without a doubt, has experienced an explosion. It is the place to be. Before, there was unquestionable talk of Miami, it was unthinkable a few years ago that people, especially from Latin America, would choose Madrid. It is a city that has always been, in my opinion, much more open and multicultural than other cities in Spain.
As a Barcelonan you won't want to compare…
No, but Barcelona had that position in the post-Olympics. I lived it, but then, around 2000, I started to live abroad, and for a while, unfortunately, I saw it as more closed to attracting international people, companies that are established, etc. This reduces the interest and value of a city, although it still has a lot of tourist interest, but in order to settle there, more things are needed; an infrastructure, favorable legislation, legal security... which is something that Madrid has fostered in recent years. There is a great transformation and you see it in shops, hotels, restaurants, leisure...
How many hotels does Hyatt have here?
We have two. It is a small presence. Hyatt is a family-owned company. In fact, the majority of the stake still belongs to the Pritzker family [the founders], it went public in 2012 and had a much more patrimonial strategy [based on the ownership of hotels]. At that time, there was a big growth shift towards an asset light model. In November 2021, when I joined Hyatt, the strategy in Europe was not as strong as in other regions, such as Asia or the US. They were very focused on the American customer, where we have very strong power. My mandate was to restructure what the company was at an organizational level and make a strategy to accelerate growth in Europe, the Middle East and Africa. In two and a half years we increased the hotels by 23% and the operating profit by 60%. In Spain we have grown quite a bit, thanks, in part, to the acquisition of Apple Leisure Group [founded by him]. In total, we have 12,500 rooms in 47 hotels, it is true that with a greater vacation focus. Madrid, of course, is in the spotlight.
You are in charge of All Inclusive, the business segment that has grown the most in recent years.
Exact. I like to call it more like resorts or vacations, because not all of the establishments we have are all-inclusive. We manage revenues worth $6 billion, which is three times more than the largest listed Spanish hotel chain and a quarter of the company. If you add the tour operator, which I have also been tasked with restructuring, we go to almost 35%. I am very focused on mergers and acquisitions and inorganic growth.
In fact, Hyatt has between 1,900 and 2,300 million in liquidity until 2028 for corporate operations. Is all that money for you?
[Smiles] Our strategy has been to sell ownership of assets and invest them in growth platforms. Shortly we are going to announce an operation, not very large, but very interesting.
Global or national?
Global. We are focused on three segments, vacation, lifestyle and luxury, which need, let's say, greater differentiation in their brands. We think that the power is in the brands and for brands to have meaning and mean something, there has to be a great emphasis on management, not only on the definition of attributes, brand codes, rituals...
Hyatt is the owner of several dozen brands. Are there too many?
I'm not going to lie to you: we are working on a rationalization of the brands. In the end, a brand only makes sense if it is different, if it is consistent and if it can be scaled. If these three requirements are not met, it does not work. In the vacation or Inclusive Collection part we are going to reduce two or three brands.
It may belong to another brand that the client recognizes more…
Sure. Now we are opening the first all-inclusive Park Hyatt in Cancun, a historic milestone. I'm going to take it from my division. We are going to open a Gran Hyatt in Los Cabos (Baja California) and another in Puerto Cancún (Mexico). Opening a Park Hyatt like this has involved a great internal debate, but in the end we decided that if we want to attract the super-luxury client, why am I going to use a brand in which I have very few hotels, such as Impression by Secrets, when you really don't have to explain to people what Park Hyatt is. We are lucky to have some hotels that automatically make people want to go, such as the Park Hyatt in Tokyo, with a lot of history, and where the movie Lost in Translation was filmed, or the Park Hyatt in Kyoto, which is where the last shogun surrendered to the Japanese empire. We want to create strong brands and codes that, to give you an idea, are not how many cushions a bed has, but how you feel when you lie down on the bed and sleep in it. That would be a code.
In Spain there has always been talk of a very segregated sector, with many very small actors. Is it still like that?
In Spain and in many European countries. The tourism industry in Europe was born in the 50s, 60s or 70s, even later, in the 90s or 2000s, as in Greece or Turkey. And all of that has many implications for how hotels are built. When I set up Alua [in 2015, a company specialized in vacation hotels] 85% of the hotels belonged to groups that had three or less. An outrage. There were no international investors. I saw an opportunity for consolidation even more so when you come to succession issues for second and third generations, and we must remember that we were emerging from a crisis.
And to close the chapter on Spain, and now that the wave of investing in hotels seems to have subsided a little, how would you say the sector has turned out?
I would say that it is not completely over. There were changes in legislation, with incentives to transform mature areas, such as Mallorca or areas of the Spanish coast, and today value funds continue to enter, which pursue returns close to 15%, although they often seek more drastic transformations. Before it was about changing a normal three-star hotel to a fancy four-star hotel, and now it has to be lifestyle or luxury, with high price rates that justify the investment, and that is scarcer because the segment that is able to pay certain prices is limited and not everyone can afford it. That's where chains like Hyatt are differentiating. We have a loyalty program with 67 million customers.
The company places a lot of emphasis on this information in each presentation to investors. Why is it so important?
For the ability to cover the rooms. We have approximately 1,300 hotels and 67 million club members; Marriott and Hilton are close to 10,000 hotels [nine times more] with about 200 million each, so our ratio is better. We have more clients per hotel. And there is another fact that is also important and that is that we have, percentage-wise speaking, more luxury, lifestyle and resort hotels, with about 60%, while in your case about 80% are hotels (mostly franchises) with limited services. And what does that do? That if I open a luxury hotel in the right place, my client will be more interested in coming than the average Marriott client [who responds to another hotel profile].
How are you introducing AI when dealing with customers?
There is a part that is clear, which is technology, data, being more efficient, to identify market trends more quickly, to know more about our client before they arrive... but there is a fundamental part that is the clients' search pattern. Now it's different. Travel searches on Google are down 20%. Guess where that 20% went? All AI tools. If you have strong brands with great recognition in all sources, you will position yourself better... and a little can replace what previously was paying to appear first on the list. And that is what we are looking for, that they directly offer our brand.
At the beginning of our conversation he commented that instead of calling the branch he runs 'all inclusive' he prefers the term 'resort'. And this leads me directly to ask you if you think that at some point this type of hotel has had a bad image...
According to a study carried out by us, 86% of those who responded had either been to an all-inclusive or were considering doing so in the next year. And of them, 84% had repeated. That said, if we talk about an all-inclusive in Spain, with hotels built in the 50s and 60s that had a single restaurant, the all-inclusive concept is simply a vacation package, but it is not an experience. If you go to an all-inclusive in the Caribbean or in the highest-level hotels we have in Europe, with the Zivas or Secrets brands, that experience is much superior: you have seven restaurants, gastronomic offerings, a wellness area, a children's area, a teenagers' area... It is much more experiential. The thing is that yes, we stay in Spain sometimes with the concept that foreigners come or tourists from the north come to spend a very cheap week consuming, but this all-inclusive that we are doing now goes much further. I am prohibited from using the word buffet, for example. The all-inclusive has evolved and this is confirmed by the data, as an upward trend, where companies are entering. Hyatt is the first global company, with 15,000 more rooms than our next competitor.
So, luxury has come to all-inclusive?
The first companies that went to the Caribbean were the Spanish ones. For me they are an inspiration, but they focused a lot on the European client. What American companies did next was open up a higher, more specialized experience to American tastes.
And what are American tastes?
In the end, it is the type of food, the type of brands we use... For an American, their first trip is to go to the Caribbean. Many Americans do not have a passport and when they go they want to feel in a more controlled, safer environment. You have to keep in mind that there are 350 million Americans up there.
The same as the Europeans in total, right?
In total, but with a higher GDP per capita and this means that even people who are in a lower socioeconomic class can spend more. Our study reveals that 24% of those who go to our All Inclusives have repeated and there are those who go up to five or six times to the same hotel. It is a model of success. We are moving from aspirational luxury to more traditional luxury.
And what is that 'all-inclusive' luxury?
There are many ways to define it. The key is to anticipate and surprise. There have to be moments in the hotel where the client is positively surprised; Sometimes it can be with a dish or with the way it has been treated, an experience that maybe you had in the shower, you know? There are many moments. The good thing about all-inclusive is that it is where you have the ability to build more loyalty, because the client is with us for many days, 24 hours, and that is why we generate more loyalty members than other segments.
And the issue of inflation in food, fuel, travel... how is it affecting you?
We are closely linked to the dollar, oil and inflation. So what is there to do? The same as in other industries: transform business models. We have to be able to be more efficient and artificial intelligence can help us there, but we also have to learn to appreciate that the client has changed and perhaps no longer needs or values discovery as much, for example...
Open their bed at night?
Exact. Reality has changed.
So they haven't raised prices?
Well, yes we have raised prices, I believe that the increase in ADR [rate per room and night] is 4.7% and RevPAR [is the average rate for occupied rooms] is 3.5% in the first half; In high season it was more and in low season, more limited.
And in Spain?
This is what I wanted to tell you. I remember when in 2016-2017 [Águila was in charge of Alua] there was a minimum salary increase of 17% in four years, which seems very good to me because in the end we are the first to say that the teams have to have more than decent salaries. But that forces you to transform your business models, because if you operate the same, in the end what you increase are your costs.
Now would you say that wage inflation has been the same with the latest increases in the SMI?
Now I think it has been lower because we already come from higher bases (…) It is true that prices in Spain were very low and we have contributed to being able to raise them. Customers also have to pay for what they receive.
Is Spain an increasingly expensive destination focused on foreign audiences?
In Spain you have culture, gastronomy, so
