Rakesh Sarna is Hyatt Hotels and Resorts Chief Operating Officer-International responsible for management of its full service hotels outside of the US, Canada and the Caribbean and the management of Park Hyatt and Andaz hotels on a global basis.
How are things for Hyatt today?
Things are good, considering where we were a year ago and where the world was a year ago. We've gone public, our development pipeline is getting stronger every day, we are very pleased with the progress of Hyatt Place with our customer base and with the development community. We are delighted to see the progress we are making with Andaz. Demand in general is back for us, and that spans across the globe. We need to work on the rate and there's still some trepidation out there in people's minds about whether the crisis is behind us, but we are in a good space today and we need to make sure we stay focussed and do the right things.
Your responsibility is everything outside North America. Is that where the expansion will take place?
I reckon given the maturity of the north American market and given the meeting of the emerging world with the emerged world down the road, simple math would suggest that there will be more growth outside the US than within, but that does not mean we will not experience any growth there - we will. Look at China and India. There's no reason why any brand or any business that has a certain footprint in the US would not have a similar footprint in China, with a population base of 1.3 billion people. There are going to be forty cities with more than seven million people.
When you expand in new markets, which brands do you push first?
We go into every city in the world and we measure our criteria by a number of matrixes: GDP growth, airport arrivals, infrastructure, housing, office rentals and once we have that data we then start to establish different price points of what the given customers inbound from outside the country, inbound from within the country and the demand within that city itself will bear and then try and package that together as a whole, The purchase price parity really dictates which brands go in there. You might not end up building a Park Hyatt in every city, but as you come down the pricing pyramid you should hopefully be able to do a Hyatt Place in almost every city in the world. We have not sat down and said we must have a Hyatt Regency in a city before we can have a Hyatt Place. There are few given ones, we must have a Park Hyatt in London, New York and Rome and Los Angeles, for instance, but those are strategic developments that improve awareness of the brand. The last factor is the competitive landscape which is critical for us to review. We try and make assessments of who is offering or likely to offer something in the same city. It's a large part science and some part an art, particularly in secondary cities in Russia, China and Brazil because there's no data available.
What about developing as a "Collection" brand as Marriott is doing allowing you to expand your footprint quickly in territories such as Europe?
We all learned the hard way never to say never, but for now I think it's very critical for us that if we are to drive preference, which is our goal, we must remain loyal to our brands and the attributes of our brands, and not start "selling" our reservations system. We are in the business of inn keeping. We have to repay the faith of our guests in us and the colleagues who work with us. We have lots of brands for different prices and demographics already.
One of those in Andaz. Why did you develop Andaz?
Our independent research identified that there was a certain segment of the customer database that wanted an experience that was unconventional. They didn't want to go to trendy or boutique hotels, but they did want to go to a neighbourhood hotel but not at the expense of the finer things of life. So we did not go in and take a hotel, turn the lights down and the music up and say, "Now this is an Andaz Hotel". We spent a lot of time focussing on certain high impact touch points of the customer experience. We took the formality and the conventional structure of the hotel out of the hotel and instead put in a deeper level of interaction between our colleagues and the guest. We took away the barriers: ie: the front desk and customers understand what we are doing. And it takes time for the word to get around about a new brand. It was a tough time to launch because the world walked off a cliff but it's back on track. The true testament comes from our guests and the development community who want them. And the Hyatt Gold Passport is the thread that binds it altogether. The customer comes to expect a certain minimum quality of inn keeping and care from any hotel under the Hyatt umbrella.
Do you think people appreciate the Andaz is a Hyatt brand?
I think they do, but it had a lot of debate about it - should it have the Hyatt brand in there, every study tells us that the brand and name is well respected, but we resisted it because we wanted to know "Can it stand on its own two feet?" And I'm glad we did. The ones who need to know do know that it is part of the Hyatt family so that debate is done and dusted and I'm glad we didn't succumb to the temptation to say Andaz by Hyatt. We wanted to build it as a neighbourhood hotel -so we have Andaz Wall St, Andaz Fifth Avenue.
The same is true with the other brands. I don't think I could sit here and say every Hyatt customer does understand the difference between every brand, but a dedicated Park Hyatt customer certainly does, and a Hyatt Place customer certainly gets it. There remain certain foggy lines of demarcation between the other brands and we will work on that, we want there to be clarity, but we also don't want to sit in our office and say "This is the difference".
You have expanded strongly in Asia. Where else are you focusing your attention?
We need to provide hotels for our customer base. You can't be a preferred hotel company if you go to a city and you're not there. And we want to fulfil our colleagues' aspirations as well. So in addition to Asia, we are very committed to making out presence felt in Europe and South America, China and Brazil offer similar opportunities, as well as Central America. Russia is an area where we need to gain traction and Europe has always been difficult. The company has made a very clear commitment that we will employ all our resources including the balance sheet to grow in Europe. We feel Europe is crucial to creating outbound traffic throughout the world so we expect to get a presence there. We will not rule out any option - buying is an option, participating with equity is an option. There's a number of ways of doing it and we'll use every trick in the bag.
How are you going to get rates back up?
The way we have seen demand come back we believe rates will follow shortly and in some instances we have seen them come back. It is not a huge concern in my mind. I believe we were very fortunate to have a board of directors who insisted we maintained our brand standards and quality through such a severe crisis, and as a result there will be no cost creep to re-establish our standards. We all have slogans, but we feel very strongly that if we want guest to be loyal to our hotels we first have to be loyal to our gusts. Rates are always a result of supply and demand.
When will the MICE business recover, especially after the intervention of the US government criticising companies for attending events at four and five star hotels.
I think that damage of those comments was quite deep. Deeper than most people care to remember. But we see life in that segment. We don't have very large meeting or conference facilities outside the US, but where we do we are beginning to see it will come back. The human race is very resilient. People need to meet and exchange ideas.
It's a big part of your business in the US. A few Park Hyatts have meeting rooms, but not most. If it works in the US, why don;t you think it will work outside?
We don't want to be specific about what the hotels can or can't have. Park Hyatts can have meeting rooms, but what we don't want is 1000 people in the lobby with badges saying "Hi my name is Bob". We have tried not to get stuck with formulas. You have to cater to the needs of the market - but if you do have an event at a Park Hyatt it has the Park Hyatt flare and elegance.
You haven't used the word "luxury". Is that now a non-word for hoteliers?
Luxury is here to stay and thrive. It isn't dead. Different people have different perceptions of luxury and people who come to Park Hyatts around the world they come to expect it, so it is defined by a customer need and a customer segment. Luxury is alive and well and kicking. Just look at the customer spending, talk to Richemond group and LVMH and what's happening in emerging markets. We have always felt at luxury should be timeless, understated and it's up to the customer to define the levels of how they enjoy it. Golden glitter isn't luxury. A common thread in the Park Hyatt is the design language. It's how we embarked with the Park Hyatt in Tokyo in 1994.
How do you see the future?
I am very optimistic about the future. The worrying thing about the crisis is no one saw it coming, but the one thing we learned was that things do rebound and people rebound and people are very resilient. I believe some corrections were needed, but the future is very promising. A key part of the Hyatt culture is to be very cautious but to look at the glass as half full. We have 80,000 associates around the word, so we have to make sure we plan for all contingencies. We plan for the future and for their personal aspirations to be met and to serve our customers.