Hyatt’s move to acquire Standard International is the latest example of a hotel heavyweight looking to bolster its portfolio with a boutique addition.
And while the news made headlines, it was not an outlier, as many of hospitality’s biggest players are increasingly embracing a more-is-more approach by snapping up smaller, independent players to expand their reach.
Patrick Scholes, managing director for lodging and leisure equity research at Truist Securities, said Hyatt’s move is part of a larger “brand grab” trend sweeping the higher-end hotel sector.
“The big companies are all looking to increase their global brand footprint, or what we would call their net room counts, and one way to do it is to find these smaller, interesting brands — Standard being one of them — and make an acquisition,” said Scholes, adding that it would be far more expensive for a company like Hyatt to develop a new lifestyle brand from scratch.
And these types of deals also provide the acquired brands with a springboard for growth.
“It plugs them into [a larger company’s] global marketing and online reservation network system and guest reward system,” Scholes said. “And developers, for the most part, prefer to work with established brands, so it certainly makes for more favorable lending availability. The big brand can come in and really take it to the next level.”
Robert Cole, Phocuswright’s senior research analyst for lodging and leisure travel, agreed, asserting that in order for a boutique brand to scale, “you need the big guy.”
“You need the reward programs and larger-scale management efficiencies,” Cole said. “The purchasing is centralized; the HR and the accounting can be too — it’s all about making things more efficient. Your cool hotel doesn’t really need an office full of cool accountants.”
The Hyatt purchase is the latest in a string of high-profile lifestyle and boutique hotel deals over the past few years.In 2021, Accor finalized a joint venture deal with lifestyle group Ennismore, while concurrently launching a standalone entity designed to consolidate the two companies’ dozen-plus lifestyle brands under a single umbrella.
Earlier this year, Hilton made waves with two lifestyle acquisitions, adding both the college market-focused Graduate Hotels and boutique player Sydell Group with its NoMad brand.
Hyatt has already proven highly active in lifestyle acquisitions, buying Dream Hotel Group in early 2023 and Germany’s Me and All Hotels earlier this summer.
The Standard acquisition is expected to close later this year, initially encompassing the management, franchise and licensing contracts for 21 hotels. Hyatt said it had agreed to pay a base purchase price of $150 million, plus another $185 million over time as more hotels enter the portfolio.
Standard International’s stable currently comprises The Standard lifestyle brand, launched by hotelier Andre Balazs in 1999, as well as Bunkhouse Hotels, Peri Hotels and The StandardX. The company also unveiled plans in July to debut The Manner, a luxury concept that’s slated to make its debut in New York’s SoHo neighborhood next month.
The Standard has eight hotels in New York, Bangkok, London, Miami Beach, Ibiza, the Maldives and Hua Hin, Thailand. Bunkhouse has nearly a dozen properties spread across Texas, California, Kentucky and Mexico. The Peri has two properties in Thailand, and The StandardX, billed as The Standard’s “rebellious younger sibling,” launched with an inaugural hotel in Melbourne, Australia, earlier this year.
Following the acquisition, Hyatt said it plans to establish a lifestyle group that will be headquartered in New York. Amar Lalvani, who serves as Standard International’s executive chairman, will helm the group as its president and creative director.
Phocuswright’s Cole said this suggests that Hyatt plans to take a relatively hands-off approach when it comes to integration.
“The Standard is cool, right? And that’s why people like them,” he said. “They have their own niche and their own particular market, and [Hyatt’s thinking], ‘Let’s let them do what they do best.'”
Scholes said Hyatt’s strategy is similar to that of other hotel giants that are growing savvier about preserving a brand’s unique appeal post-takeover.
“They understand that a brand like Standard is going to have to maintain a certain amount of independence, because that’s what makes the brand popular,” he said. “It’s kind of a balance, and you have to give a brand a certain degree of freedom.”
Scholes added that today’s hotel companies also appear increasingly willing to embrace brands with an edgier or more unconventional approach to hospitality.
“This is something that probably wouldn’t have happened 10 or 20 years ago,” Scholes said.
Michael Bellisario, a senior hotel research analyst and director at Baird Equity Research, echoed that sentiment.
“If you take a look at what Hilton, Hyatt and Marriott, for example, have done recently in terms of brand acquisitions and strategic partnerships — Graduate, MGM, NoMad, Sonder, etc. — all of them have been ‘edgier’ and adjacent to their core legacy brands,” said Bellisario.
This ongoing spree of deals and partnerships also suggests that there’s no end in sight to the hotel industry’s “brand grab.”
“There is a theoretical limit, but if I say [we’d reached it], there’d be another announcement tomorrow,” Scholes said.