Hyatt values quality over quantity with Unbound

Nearly two years out from the launch of its soft brand, Hyatt Hotels Corporation officials said the Unbound Collection is starting to realize its potential.

While the size of Unbound’s seven-property portfolio might not be eye-popping, David Tarr, SVP of real estate and development for the Americas, said that was always the plan.

“The brand was always intended to be a little bit different than a lot of the other soft brands out there,” he said. “There are quite a number of soft brands for other companies designed to be robust growth vehicles. We already intended (Unbound) to be a brand we grow very thoughtfully with an objective to curate a brand consistent in terms of quality.”

Several hotel companies have launched soft brands recently, and some have targeted lower price points. Tarr said Unbound adopts a very different strategy and isn’t intended to be a “catch-all” or a fast growth driver.

“We believe in relevant scale, not as much numbers scale,” he said. “It’s a balance of doing projects that are accretive to our brand, not just our (earnings before interest, taxes, depreciation and amortization). We’re in a business here and want to generate earnings for our shareholders, but when we think about development, every time we look at a project, we ask the question ‘Will this hotel lift the brand it’s a part of?’ That’s fundamentally important for the Unbound Collection.”

Unbound was first announced in early March 2016 with four properties—The Driskill Hotel in Austin, Texas; the Hôtel du Louvre in Paris; the Carmelo Resort & Spa in Carmelo, Uruguay; and the Coco Palms Resort in Kauai, Hawaii.

Tarr said The Driskill was technically the first Unbound property because it was in the Hyatt system with a unique identity for a couple years as a test case.

“The purpose of that was to see if loyal customers would accept a hotel like that and see the benefits,” he said. “It was also (meant to see if it was) a good on-ramp for guests who had been staying at the Driskill for decades to see why Hyatt was a good fit. We realized quickly it was a good opportunity.”

Shortly after the launch of Unbound, Hyatt officials sought to expand the soft brand via first-party investment with the purchase and renovation of the then-Thompson Miami Beach Hotel, which was rebranded as The Confidante.

The collection added two news properties in 2017—The Holston House in Nashville and the Spirit Ridge resort in Osoyoos, British Columbia.

Tarr said the company has several new Unbound hotels in the works, including the new-build Eliza Jane hotel in New Orleans and The Bellevue Hotel in Philadelphia, scheduled to open this spring. In late January, Hyatt officials also announced a “new 64-room boutique hotel” in Hollywood, California, that will join the collection when it opens in 2019.

The Bellevue is already part of the Hyatt system and under a Hyatt flag, but moving it to the Unbound Collection and giving it a more unique identity is an opportunity to better honor its history and reputation within that market, Tarr said.

“For many years, people have known that property as The Bellevue, and it’s always had an independent sensibility,” he said. “It’s always had a sense of history about it, but before we had the collection, we couldn’t think about it in that context.”

He said the company is looking at some of its properties for conversion into the Unbound Collection as a way to better highlight their unique personalities.

“In each and every case, these are hotels that have a personality unto themselves and a story that’s unique,” Tarr said.

Various avenues of growth are being pursued for the brand, he said, and Hyatt officials remain willing to deploy their own capital to secure unique locations and properties, as they did with The Confidante. But he believes the lion’s share of growth will come through franchising and management, he said, adding that the feedback from owners has been “very, very positive” on the collection.

Regardless of how the brand grows, Tarr said it’s vital that all new properties maintain the quality and high level of expectations set by the current portfolio. He said this is key for current and future owners.

“The ownership community wants to know we have our eye on the ball,” he said. “They’re particularly focused on the hotels we bring in being representative of the quality they want us to be committed to. They want to know that when they align with us they can be sure we won’t suddenly start dipping lower (in quality) in the interest of growing our fee stream.”

He said the collection has to strike a balance between doing new and interesting things to improve guest experiences while not becoming a vehicle for the company to “tinker with things” before rolling out to other brands.

“We want to be careful about it,” he said. “It’s not a laboratory. If we put something in Unbound, it’s because we’re convinced that’s where it fits. … We don’t want misses necessarily, but I don’t want to say we’re not willing to try new things.”

The brand’s integration with the Oasis Collection home-sharing platform is one new thing Hyatt is trying out and invested in. Tarr said Unbound and Oasis share a common modus operandi.

“It makes sense because home-sharing like Oasis is an immersive lodging experience,” he said. “It puts you in the heart of the destination you’re seeking to be in. And we know with the Oasis Collection we have a brand that has a certain quality threshold we’re comfortable with. We thought this would be a good way to expand to markets that don’t have as much hotel presence as we’d like to see.”