Skift Travel News Blog

Travelers United’s choice to sue Hyatt over its “junk fee” practices fits into a broader storyline about travel junk fees being in the limelight ever since President Joe Biden referred to travel fees in his 2023 State of the Union address.

Travelers United filed the case in Washington, D.C., whose laws require transparent upfront pricing.

The lawsuit notes that “in or around August 2023” Hyatt began advertising accurate pricing information to consumers looking to book a hotel room. On Hyatt.com today, in Skift’s tests, the site displays rates plus resort fees upfront on a traveler’s first search. Hyatt appears to have changed its site to more transparently present resort fees within the past month or so.

But the advocacy group wants Hyatt to pay for the time it didn’t disclose resort fees upfront.

“Since at least 2020, Hyatt has been systemically cheating consumers out of tens, if not hundreds, of millions of dollars each year by falsely advertising its hotel room rates,” the lawsuit claims (embedded below).

We asked Hyatt for a comment yesterday, but haven’t received a response.

Travel commentator Gary Leff blogged that “This is an industry-wide problem, not a Hyatt problem.”

Lauren Wolfe of Travelers United said yesterday the advocacy group plans to file similar lawsuits against other hotel groups.

Yet broadly, some consumers seem to take the the industry practice of drip pricing in stride. One study found that guests dropped their online ratings by only a small percentage after they faced “surprise” fees and booked anyway.

U.S. hotel developers have more projects for extended-stay properties than any other type of hotel, whether measured by number of projects or room count, according to new data.

In the second quarter, developers expanded their pipeline of extended-stay projects by 18% year-over-year to 2,083, said Lodging Econometrics, which collects and studies hotel development.

The extended-stay category had growth outpacing lifestyle, soft-branded, traditional limited-service, and generic full-service properties, as measured by property count and room count. Lodging Econometrics created this chart to illustrate:

One caveat: A segment that was hard to count because it’s so small was independent boutiques.

For independent boutiques only, CoStar’s STR counts 4,227 rooms in construction, with 2,338 rooms projected to open in 2023. That’s a 2.8% year-over-year growth in supply. There are only 16,565 rooms in the indie boutique pipeline.

Accor said on Monday that it had named Gilda Perez-Alvarado as its group chief strategy officer in charge of overseeing global strategy, relations with hotel owners, and strategic partnerships.

Since 2004, Perez-Alvarado has been at the hotel brokerage firm JLL Hotels & Hospitality, working her way up to become its Global CEO. She’s intimately familiar with the sector’s biggest owners and investors, such as sovereign wealth funds, private equity, global brands, family offices, and ultra-high-net-worth individuals.

Perez-Alvarado has spoken about real estate and capital markets at multiple industry events, including at Skift’s Future of Lodging Forum. She will start her new role on October 1, becoming a member of Accor’s management board.

Hyatt gave details on Wednesday about the first locations for Hyatt Studios, a brand it unveiled in April. The hotel operator will open the first Hyatt Studios just outside of Mobile, Alabama, and Marysville, California — targeting spots where its other brands aren’t present.

“We’ve learned that when Hyatt guests stay with a competing brand, they appear to do so for one of two reasons: the absence of a Hyatt hotel within five miles or the choice to stay at a lower chain scale,” said Dan Hansen, global head of Hyatt Studios. “By enabling guests to choose a Hyatt hotel in new markets, we grow brand loyalty without intra-brand competition and present more white-space options to developers.”

The company’s “upper-midscale” extended stay brand anticipates opening its first new-build property late next year.

In the port city of Mobile, Hyatt is franchising the brand to 3H Group, founded by Hiren Desai. The port city has tourism, manufacturing, aerospace, and the corporate offices of retailers — all likely to have workers and visitors making multi-day stays and preferring non-budget lodging.

In downtown Marysville, Hyatt founded a franchisee in Presidio Hotel Development. The spot isn’t far from the capital of California, Sacramento.

IHG Hotels & Resorts revealed on Tuesday that it has been pitching hotel owners on a new brand addressing an opportunity in the middle of the market it said is underserved.

“Our aim is that this new conversion brand will become the first choice for guests and owners in the midscale segment, accelerating our growth in a space that is already worth $14 billion in the U.S. market alone,” said CEO Elie Maalouf during remarks tied to the company’s quarterly earnings.

The Windsor, UK-based hotel group — whose brands include Holiday Inn, Crowne Plaza, and Six Senses — didn’t reveal the name of the new brand, which has become IHG’s 19th brand, or other details.

“We’re delighted that more than 100 hotels have already expressed definitive interest in the new brand,” Maalouf said.

Designed for Fast Growth

Maalouf likely wanted to prioritize a conversion brand over a new construction brand to help address IHG’s need to maintain steady growth in its hotel pipeline.

Unlike new-build brands that take time to grow because of construction delays, conversion brands can expand quickly, especially as many independent hotel operators or owners of properties flagged with older brands seek a refresh.

“Conversions represent a major growth opportunity for us, generating around 40% of first-half openings and signings globally,” Maalouf said.

Addressing the Mid-Market

The new brand is Maalouf’s first big move as CEO, having taken the top job last month.

Maalouf had previously led the group’s North American business for 8 years. During that time, he showed an interest in mid-market growth.

Maalouf led his team in debuting the new brand Avid, in 2017, which he said at the time targeted “a vastly underserved $20 billion segment of the U.S. midscale market.” Avid charges roughly $10 to $15 a night less than Holiday Inn Express, IHG’s midscale leader, and less than Candlewood Suites, IHG’s other mid-scale brand. (The difference in market size figures Maalouf has quoted refers to different segments of the overall mid-market.)

Given Maalouf’s sense that the mid-market is underserved, he has prioritized putting another IHG brand on the grid. That said, IHG’s board (on which he’s been a member for years) approved of this initiative before Maalouf became group CEO.

The hotel franchisor already has upper midscale with Holiday Inn and Holiday Inn Express, so the new brand is likely more affordable.

IHG expects to target around a 25% lower cost per room to convert to the new brand than that for Holiday Inn Express.

Facing Rivals

IHG’s rivals have also been looking at the middle of the market.

• In June, Marriott International said it would expand into the “affordable midscale” hotel category in North America with a new hotel brand — which it hasn’t yet named. The move came after earlier this year, when it completed its acquisition of City Express, a midscale brand focused on Latin America.
• Hilton CEO Christopher Nassetta said in his second-quarter earnings call that the “mid-market” was what he coveted long-term. “We’re not ashamed of saying we have every intention to have the best brands in every market to serve the mid-market because we think that’s where the most money will be made over the next ten or 20 or 30 years,” Nassetta said.
• In May, Hyatt unveiled a new brand, Hyatt Studios, in the upper-midscale segment.

Every One of IHG’s Hotel Brands, Explained

IHG has assembled a hospitality collection with some of the most wide-ranging and eclectic brands in the world. Here’s what you need to know about every one of them.

Read More

Buying a share in a company typically involves hoping the stock price rises over time and maybe means sharing in dividends. But Selina, an upstart hospitality brand, said on Wednesday it has a new enticement for people to buy its stock — discounts and freebies at its properties.

“Today, investing extends beyond the balance sheet,” said co-founder and CEO Rafael Museri.

Selina shareholders will be able to enjoy upgrades at the company’s hostel-style lodging, discounts or free breakfasts at its restaurants, lake checkouts, access to co-working spaces, and “exclusive event invitations,” depending on a variety of factors via the Selina Shareholders Program.

Selina isn’t the only travel company to try this. Carnival Cruise Lines, Norwegian Cruise Lines, and Royal Caribbean Cruise Lines have long offered onboard credit per stateroom on select sailings to confirmed shareholders. Intercontinental Hotels Group (IHG) has for years let shareholders enjoy discounts at their hotels if they book through a private website available by emailing the company’s registrar with proof a person holds shares in certified form.

But Selina has innovated, making the process to verify that someone holds shares fully digital. The process appears to be more seamless than what other travel companies have offered.

On Selina’s investor page, shareholders can link their online, U.S.-based brokerage account for verification. Other eligibility requirements can be satisfied online, and bigger investors can enjoy bigger benefits. After vetting, the company aims to send shareholders access to benefits within five business days.

“We extend a special thank you to retail-focused investor relations agency, Equity Animal, along with our technology partner, Stakeholder Labs, for their collaboration in creating the Selina Members Club,” said Sam Khazary, executive vice president and global head of corporate development.

”The Selina Members Club is not only a strategic move to strengthen relationships with customers who are also shareholders,” Khazary said. “It also serves as an expression of gratitude for their steadfast support.”

Certares, a private equity firm that invests in travel, said on Wednesday it had closed its first real estate hospitality fund, with $284 million of equity commitments.

The fund is acquiring hospitality real estate assets in U.S. growth markets. It has already made investments in 10 hotels that together have more than 2,100 keys.

The New York-based investments specialist has invested heavily in travel companies — most prominently American Express Global Business Travel, car rental brand Hertz, the airline Azul, and Liberty Tripadvisor Holdings.

“A targeted real estate strategy is a natural extension of our experience in travel and hospitality,” said Greg O’Hara, founder and senior managing director at Certares.

The 10 hotels that Certares has made investments in include:

• AC Hotel Santa Rosa Sonoma Wine Country
• Sea Crest Beach Hotel in Cape Cod
• Courtyard San Diego Downtown
• EAST Miami in downtown Miami
• Ashore Resort & Beach Club in Ocean City, Maryland
• Doubletree Suites Doheny Beach in Dana Point, California
• Embassy Suites Midtown Atlanta
• Hilton San Antonio Hill Country
• Le Meridien Tampa
• The ARC Hotel in Washington, D.C.

The fund’s operators can take advantage of Certares’ leisure and business travel distribution assets, which it said “enhance demand and provide market intelligence for the hotels.”

The fund has an active pipeline of new investments, said Nolan Hecht, senior managing director and head of real estate at Certares, in a statement. Hecht previously oversaw hotel investment and asset management at Square Mile Capital Management.

Wyndham Hotels & Resorts said on Tuesday it had signed 60 more hotels for its Echo Suites Extended Stay by Wyndham brand in the U.S. and Canada.

That brings the extended-stay brand’s pipeline to 265 hotels, with about 33,000 rooms. It’s the fastest-growing brand in Wyndham’s development pipeline.

The growth is remarkable. Wyndham only formally announced the brand last November, and it doesn’t expect to have its first Echo Suites hotel open until 2024. Few other brands introduced in the past few years have gained such rapid traction with developers.

Wyndham partly credits its success to having worked closely with developers when inventing its prototype — obtaining earlier design buy-in than has been customary. The franchisor also has a commercial strategy of signing multi-unit deals with veteran developers, such as MasterBUILT Hotels in Canada.

“From day one, Wyndham made a point of seeking the input of experienced developers and then actioning on their insights,” said David Donaldson, president and CEO, MasterBUILT Hotels.

For context, read: Why Every Hotel Company Wants an Extended Stay Brand Now and Wyndham Hotels & Resorts’ Brands, Explained.

Scandic Hotels Group began the hotel earnings season with a financial update on Friday, voicing optimism about travel demand despite recent inflationary pressures.

“We expect a strong third quarter with high demand and increasing prices,” said president and CEO Jens Mathiesen on an investor call.

Scandic runs 55,930 hotels in Scandinavia and other European countries under the Scandic, Hilton, Holiday Inn, and Crowne Plaza brands — mostly under long-term leases. Friday was the 60th anniversary of the Stockholm-based company, one of Sweden’s most well-known brands.

“We expect a strong third quarter, driven by continued high levels of leisure travel during the summer as well as business travel and meeting gaining momentum in the latter part of the quarter,” Mathiesen said. “So based on the current booking situation, we expect occupancy to be on par with the same period last year, but also continuing at higher average prices per room.”

In the second quarter, the company enjoyed record high revenue per available room, or RevPAR — a key industry metric.

In the second quarter, Scandic generated a profit of about $26 million (271 million Swedish krona) on net sales of about $556 million (5.69 million Swedish krona).

The hotel group has one of the lowest levels of indebtedness of any publicly held competitor. As of the end of June, it had net debt of 2.8 billion Swedish krona, which was only 1.1 times its adjusted earnings before interest, taxes, depreciation, and amortization on a rolling one year basis.

The company recently entered the economy segment with Scandic Go, a brand with 221 compact hotel rooms. The brand’s design aims to drive more room revenue per square meter at a lower capital expenditure and labor cost on average than its other brands. The new brand’s first property will open next summer.

Choice Hotels, a U.S.-based franchisor, said on Tuesday it had opened an average of more than four hotels a week in the first half of 2023 — a 39% jump year-over-year. The steady onboarding of properties was one reason it reaffirmed its profit forecast for the year despite some industry concerns about leisure demand patterns in the U.S. going into reverse.

Choice Hotels opened 107 hotels in the first half of the year, with an increase in conversion hotel openings of 45% and a rise in new construction hotel openings of 24%. The gains were impressive in a hotel sector where interest rate uncertainty had raised concerns about the willingness of banks to endorse hotel development.

The first-half openings growth was across all segments. Openings in the upscale segment were by 83%, the midscale segment by 42%, the extended stay segment by 50%, and the economy segment by 11%.

“The company remains optimistic about extended stay franchise business growth and expects the number of its extended stay units to increase at an average annual growth rate of more than 15% over the next five years,” it said in a statement.

The positive news helped the company re-commit to its previously provided financial guidance for full-year 2023, where it forecasts net income — a measure of profit — of between $255 and $265 million.

The news is positive at a time when analysts have become more cautious about the hotel sector. For more context, see “Analysts Pare Back Enthusiasm for Hotel Companies.”

Investors closely watch trends in another metric, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The news on that front was also positive relative to its peers.

“In 2024, Choice Hotels expects to generate more than 10% adjusted EBITDA growth at the midpoint, year-over-year, driven by approximately $20 million in incremental contribution from [the merger with] Radisson Hotels Americas as well as organic growth in more revenue intense segments and markets, strong effective royalty rate growth, and other factors.”

For more, see “Choice Hotels’ Brands, Explained.”