That’s the clear signal sent by Chicago-based global hospitality giant Hyatt, which on August 16 announced plans to buy the KKR-backed resort operator Apple Leisure Group for $ 2.7 billion in cash, an amount that Crain’s Danny Ecker notes this week is equivalent to more than a third of Hyatt’s current market cap.
You may know Apple Leisure Group from its flashy ads touting budget Funjet packages and last-minute Apple vacation packages to sun-drenched beach destinations like Acapulco, Nassau, and Honolulu, though the company has a presence in Europe, Asia as well. , Australia, Africa and the Middle East. East and is partnering with airlines, including United and Southwest, to offer vacation packages. The colorful world of Apple Leisure is populated with images of smiling families holding hands while jumping into aqua blue pools, teenagers sliding down slides, lovers in swimsuits strolling down the beach at bedtime sun and offers “instant savings”, “limited time promotions”, “kids stay FREE” and exclusive “Hot Hot HOT” benefits.
In other words, it’s a far cry from the ‘put it on the corporate AmEx stage’ scene at the traditional Hyatt hotel.
Hyatt could hardly be faulted for wanting to branch out at a time like this. Its high-end portfolio, laden with midweek travel, “is probably suffering the worst” from the pandemic among various types of hotels, as a hotel industry analyst told Crain’s this week. Weak business demand contributed to Hyatt’s $ 9 million net loss in the second quarter. As Ecker notes, this is a significant improvement from the pandemic-emptied second quarter of 2020, when its net loss was $ 236 million, but it is still a far cry from the $ 86 million in net income generated. by the company during the same period in 2019.
Hyatt’s decision to put a huge stack of its fries in the realm of flip-flops, ziplines and all-you-can-eat shrimp buffets means one of the smartest players in the hospitality industry thinks the pandemic may have altered from permanently the industrial landscape travel. This idea has profound implications for Chicago, and not just for those who own Hyatt shares.
Chicago is one of the nation’s premier convention and trade fair centers, a distinction that fuels a diverse hotel economy from our airports and taxi and Uber drivers to restaurants, museums, nightclubs and performance venues that entertain guests. participants during their stay. .
Everyone, even remotely, connected to the hospitality industry, is looking for clues of a rebound in business travel. Even though the Delta variant hadn’t spoiled what once promised to be a relatively COVID-free summer and rekindled qualms about in-person meetings, there’s reason to believe workers and managers have discovered and enjoyed it. the convenience and economy of remote meetings via Zoom. Why pay for staff to come to the Wahoo, Nebraska home office when Wahoo is just a click away?
If Hyatt’s reading of the situation is correct, Americans will not travel to do business with anything like the frequency we have already done, even after COVID is just a memory. As a result, Hyatt pivots. And that means the rest of Chicago will likely have to pivot as well. Anyone with an interest in the travel economy here, including the mayor, governor, and their travel teams, are going to need to think creatively about how to replace business travel dollars with travel dollars. approval.
This may mean rethinking some investments in infrastructure. Mayor Lori Lightfoot, in particular, has his work cut out for him on this front. McCormick Place, for its part, presents a challenge. What’s the plan to make the most of this gigantic convention space in a future where business travel is drastically reduced? Adapting to the reality to come most certainly also means mastering the city’s crime problem, a problem that plagues people who live here all year round, but also dampens interest in visiting this otherwise alluring city. . It’s one thing to book a trip to Chicago if the boss sends you; it is quite another to choose to come here if you are looking for an enjoyable vacation in a lively, attractive and safe place.
Take inspiration from the Hyatt, Chicago. Now is the time to start preparing for the post-COVID future.