"Let's breathe, all this will pass." Mark Hoplamazian relies on his experience and an optimistic spirit to judge the storm that is hitting any business with international interests that seems to be approaching the end of an era with the global trade war declared by the President of the United States, Donald Trump. Hoplamazian is a great expert in the world of major hotel chains. He has been presiding over and managing Hyatt, one of the largest groups in the world, for almost 20 years. An American of Armenian origin, he recalls major crises such as the 9/11 attacks, the collapse of Lehman Brothers and the Great Recession, the Covid-19 pandemic... and he ensures that facing problems with the calamities announced by Trump involves adopting a positive attitude that is not known if it is part of a professional discourse aimed at calming partners and investors, staff, or both. The fact is that while last week he spoke to Actualidad Económica at his hotel in Potsdamer Platz in Berlin along with other international media, Hyatt's shares took a breather before plummeting again with the rest of the market following the global imposition of tariffs, accumulating a 33% drop since January this week.
Hoplamazian is convinced that he will know how to move forward with a business of 138,000 rooms worldwide, more based on managing activity than on property investment and, in his new plan, with a range of five brands to cover the entire market. The American major hotel chains have been surprised by the trade war escalation in their determined bet to expand their business towards Europe with formulas such as all-inclusive that not long ago were aimed at customers with a less luxury-oriented profile that is now taking off. Leading this growth offensive for Hyatt will be a Spaniard, Javier Águila, in charge of a portfolio of 55,000 rooms in 40 countries, including a recent partnership with the Piñero group, starting in July. It is not an impromptu move. The explosion of the tourism business in the years following Covid has boosted traveler arrivals, their spending, airport traffic, and hotel investment, especially in countries like Portugal, Spain, or Greece.
Question. Hyatt's commitment to Spain is one of the most prominent in its global growth plan, but it is a mature market with a strong increase in prices in recent years. What attracts you to the Spanish business?
Answer. Spain is the number one destination for many Europeans. They love it, and there are many good reasons: the wines, the people, the food, the beaches, the mountains... practically everything. Many years ago, when I first visited Spain, I went to Galicia and thought I was in heaven... and of course, it also has some of the best resort areas in the world, such as the Canary Islands or the Balearic Islands. But I also love the mountains, which are underrated. I think it is an extraordinary country.
Q. Where do you plan to invest?
A. We do not have direct investments in Spain in hotel construction, but we have invested a lot in infrastructure and in our joint venture with the Piñero family (both companies reached an agreement to share a partnership with 23 hotels from the Spanish group), which is based in Palma and also has a presence in Madrid. They have an impressive legacy: Don Pablo Piñero built his business from scratch. We do not build hotels directly because there are many excellent developers who know the business very well. It is not our specialty, so we prefer to partner.
Question. Also with other partners?
Answer. Yes, we are going to open a new Thompson hotel in Seville in the first half of next year. We are also negotiating and closing many other projects right now.
Question. The tourism sector in Spain seems to have no ceiling and aspires to reach 100 million travelers.
Answer. What should happen - and I hope it does - is for people to discover the rest of Spain. Not just two or three places. Some time ago, I drove from Barcelona to the north coast and reached Santiago de Compostela, and it is spectacular. There is so much to discover. Spain is the most underrated wine-producing country in the world. And also its cuisine. San Sebastián, for example, is not saturated with tourism, it was one of the first cities to limit Airbnb, not because Airbnb is bad, but because it can alter the authenticity of the place. Spain is a special country and deserves protection. For too long, Americans have overlooked Spain. They always think of London and Paris, but they should think of Madrid, Barcelona, Seville, Pamplona... We are doing everything we can to attract more Americans.
Question. What effect do you think the trade war can have on the arrival of American tourists and on the business in general?
Answer. We have been in business for almost 70 years and have experienced all kinds of economic cycles, including some very tough ones. During my time, we have gone through the great financial crisis, Covid, and I was even in the company when the first Gulf War broke out and 9/11. Both the company and the sector have overcome very severe disruptions, so when asked about the scenarios we handle, my answer is that we do not make specific scenario plans. What we are doing is building an agile, flexible company that adapts quickly and has a growth mindset. When faced with the unpredictable - as is the case now with financial markets full of uncertainty - the most useful thing is not to try to guess what will happen but to be ready to pivot. Trying to predict which of the thousands of possible scenarios will come true is a waste of time, and the best we can do is prepare our structure and mindset to adapt in any direction, immediately. That is our strategy.
Question. But how will tariffs specifically affect the hotel industry?
Answer. I believe tariffs do not directly affect tourism, as they focus more on goods than on services, and hospitality is, by nature, a service industry. But there are two things I want to emphasize. First, we have the wind at our backs because traveling has become essential for almost everyone after Covid, it has become a basic need not only for people traveling for pleasure but also for businesses. Also, it is true that hospitality is intensely local if we do not build this hotel ourselves. If a developer builds it, most of what is involved in the hotel is obtained locally: advisors, designers, employees... all come from the local market.
Question. The political tensions unleashed by tariffs also have an impact. Canada has reduced its tourism to the United States, for example.
Answer. Yes, but it is also important to remember that the hotel industry covers a very broad spectrum of travelers. If you look at it by income level or by prices, it covers a very significant range. We operate more in the higher end of that range. The type of customer we serve is not the one who will stop traveling, even if there is a negative attitude towards the U.S. We may not find as many Canadians in our U.S. resorts, but we do in our resorts in the Caribbean and Mexico. The total trips to the U.S. have decreased by 16% if you adjust the figures. It is a lot, but sometimes the headlines exaggerate, making it sound like a free fall to economic collapse, and I believe that, first, one month does not set a trend; second, we need to carefully analyze what is happening to understand it. I am not saying it will not have an impact, I am saying that the magnitude may be exaggerated right now because there is a point of increasing anxiety and drama. It seems like everyone is going to retreat to their village forever, it is a catastrophic logic. Even Bill Gates was wrong when he said in August 2020 that all companies in the world would permanently reduce their business travel by at least 50%. Making predictions in the midst of chaos is very risky. We are not naive, but I do say let's take a breath, things will happen. There will be new turbulence. And we will experience others that we cannot even anticipate today.
Question. How does it affect a global brand like Hyatt that operates in a sector where equity, inclusion, diversity... are basic values, the U.S. Government's executive orders against these values?
Answer. We have been committed to an inclusive environment since our foundation. For example, in 1968, the Hyatt Regency Atlanta was the first large-scale hotel the company opened, it was huge. Martin Luther King Jr. and his organization wanted to hold a convention. All the hotels in Atlanta rejected them, except us. We welcomed them, and Martin Luther King Jr. called the Hyatt Regency Atlanta "the hotel of hope" because we welcomed them instead of rejecting them, that is in our DNA. Our purpose is to take care of people, all people, and we have the most diverse team you can imagine: from all backgrounds, nationalities, religions, sexual orientations, gender identities... everything. Yes, of course, we have adjusted some of the language in our policies because some executive orders have changed. But that does not change our commitment: supporting one group does not mean excluding another. Everyone is welcome.
Question. You arrive at a time of strong growth for the company...
Answer. Yes. We have doubled the size of the company in the last seven years. We focus on three areas: luxury, lifestyle, led by our vice president Amar Lalvani, and resorts. Our portfolio of new hotels has almost 140,000 rooms. But we have not only grown in volume, we have also diversified by creating Hyatt Studios (rooms with kitchens or mini-apartments) and Hyatt Select to enter markets where we did not have a presence. 70% of the times our loyalty program partners did not stay with us was because there was no Hyatt hotel nearby. So we created new brands for those niches: more accessible, but always within our premium range, we are not going into the economy segment. We want to maintain the consistency and network effect of our brands.
Question. Isn't it a too complex structure?
Answer. Good question. It is not about serving the general traveler, the general traveler means nothing. We want to serve specific people, with defined tastes that our offering covers. When you achieve that goal, magic happens: they want to come back, and visit more hotels of that brand. More personalization means more value, more loyalty, more profitability. It is good for the guest, for the hotel owner, and for us as a company.