CHICAGO—Executives of Hyatt Hotels Corporation are restructuring the company this year in an effort to increase performance and effectiveness, CEO Mark Hoplamazian said Thursday during the company’s first-quarter earnings call.
The reorganization includes a realignment of the company’s operations and development teams and several senior management changes.
Most notable is the departure of Hyatt’s CFO Harmit J. Singh.
Singh will remain in his position until 15 August, 2012, and then move on to an executive VP position until 31 December. He will then move on to new opportunities.
When asked why he is leaving the company, Singh said: “Mark (Hoplamazian) felt it beneficial to have someone with deeper hotel operational experience … So I think on that basis concluded that it’s probably best to pursue other opportunities after a transition period.”
Gebhard F. Rainier, the company’s managing director of Europe, Africa and Middle East, will move to the CFO position effective 15 August.
Additional changes include the establishment of three operating regions—Asia; the Americas; and Europe, Africa and the Middle East—to be supported by a new global operations center.
A real estate and capital strategy group also was formed to manage Hyatt’s hotel assets and provide development support around the globe.
Much focus during the call was put on Hyatt’s recent acquisition of the Hotel Nikko Mexico in Mexico City and what it means for the company’s future.
Hyatt will invest $40 million in a renovation that will result in the hotel’s conversion into the Hyatt Regency Mexico City. The renovation is expected to be completed within the next two to three years.
Hoplamazian said Mexico City is a gateway city in the Latin American market and being there will help expand the company’s resort presence in the region and support its group business.
“We also believe that there’s a significant opportunity for select-service development in Latin America in general, and we’ve been applying a lot of resources to that,” Hoplamazian said.
As for Europe, the economic crisis has not allowed the company to further expand in the market, “but we continue to look for opportunities, especially because our presence in Europe remains relatively modest,” he said.
The results Hyatt is seeing from the Lodgeworks portfolio it acquired in 2011 are slightly ahead of what executives expected in 2011, Hoplamazian said.
“The (revenue per available room) progression has been very solid,” he said.
The company is identifying and pursuing opportunities for new developments that came with the team from Lodgeworks.
“We don’t expect to engage in an extensive development program on our balance sheet, but we will apply capital to get projects moving and to seek out good partnerships,” Hoplamazian said.
Group business was strong during the first quarter, Hoplamazian said.
Revenue increased 9%, and group bookings during the quarter for the quarter increased 20%.
“The strength we saw in the group business in the quarter primarily came from corporate,” he said.
Group business for 2013 and 2014 continues to grow, Hoplamazian said. For 2013, Hyatt has approximately 43% of the business in its books and for 2014 it has approximately 30%.
Rates also are increasing, he said. They are up 2% over last year.
“Overall, trends are looking decent,” Hoplamazian said.