Hyatt is smaller than its hotel chain competitors. So how did it get to be the most expensive? Watch the Economics of Hyatt: on.wsj.com/3xt9yNf How did Marriott become the largest hotel chain, with over 30 brands? Marriott’s CFO explains why this is just the beginning for the hospitality giant: on.wsj.com/3xhNqpb
There are certain brand standards owners have to follow in order to operate under a certain name; but yes it does become inconsistent sometimes as some owners care more about operations than others.
This is why most hotels are a complete crapshoot on what you get. Very little consistency in physical product, amenities, and especially service. Breakfasts are weaker, housekeeping services reduced, loyalty recognition is greatly minimized. Not saying every chain hotel was perfect before, but ever since the pandemic and the offloading of property by the chains, the service has gone downhill at nearly every hotel I have stayed at.
polarspacebear: As the video notes, Marriott/Hilton made the decision to go "asset-lite" decades ago. The franchised hotel model dates back to the early 1970's...this was not an idea that took hold post pandemic. Your experience is not unlike any business post-pandemic...harder to find staff, etc. Not due to a dramatic shift in who owns the hotel real estate.
as a former hotel worker. the real loser here is the loyalty customers, it's literally a sign on the front door. that's it. nothing special about the hotel. use your brain, look at all hotels individually and pick what you like for a price you are willing to pay.
The quality has gone way down. I was in a Hilton recently where they were charging $50 per night for a mini-fridge - the same kind of fridge you can get for $120 from Costco, and which used to be supplied in every hotel as standard
It's funny how the CEOs of the hotel companies, who make money from selling their brand, *look* like rich people; while the MCR CEO looks like a used car salesman.
I used Marriott almost exclusively for 17 years of business travel. Now that I'm retired, I've found that IHG is a much better value and the service is much more consistent. Also, as a lifetime Platinum with Marriott, I used to get upgrades quite often pre-COVID but haven't seen one since.
SPG was the Top until Marriott bought it. I got 10 years of the most undisputably amazing membership with SPG. Still got the many gifts and SPG "NO BLACKOUT"points. Today that concept is hardly doable.
When I heard the CFO of Marriott say "we are the largest, 8700 hotels in 139 countries and territories, really showing expertise around the world for what we think hospitality means", I thought this meant, you know, making a nice hotel for guests. Turns out this is left to the franchisees, and what hospitality means to Marriott is figuring out how to charge as much as "the market can bear", and setting up anti-competitive loyalty programs to stop customers from shopping around outside of their flag.
While that true, what they also have is data to tell the franchises what attracts customers in terms of what makes a customer happy with their hotel choice, amenities, room layout/style etc.
And overtime, the marriot, hilton, etc will slowly go down hill. A fact they acknowledge within this video. When you loose control over quality standardization, it becomes inevitable that the brands reputation looses value as well.
Not necessarily. If they go the McD's route, they can impose strict standards & plenty of brand-support (design, suppliers, advice on where/how to locate, etc). The issue is that they are *also* going the Subway route - allowing way too many franchisees in smaller markets, or in close-proximity in larger markets, such that supply exceeds demand. Outsourcing the risk in this way can be good for all parties, but you have to impose some reasonable limits.
@@mandisaw everything from your second sentence still stands true. They are just trying to sell as many of their brands to owners as much as possible. As long as the hotel is making money off royalties they don’t care. Even if margins are thin for the owner. But yeah if margins are thin for the owner, it’s harder for the owner to keep up with new brand requirements and renovation cycles which require a lot of capital at times.
I work at a Marriott trust me if your service sucks its because quality of work has been destroyed. We have been reduced to so few workers we cant keep up. They made a new building where i work at . Never hired more people. Trust me it sucks to the extremes. All of our best employees that were diamond left my Marriott and found better jobs and that was in every department btw.
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
We seem to do a whole lot of the asset light business model here in the US. Outsourcing Manufacturing, Uber , Air BNB , Hotel ownership , Franchised Restaurants , Finance , Call centers, health insurance . Capital likes to take the path of least resistance It's no wonder other countries are growing their economies. It's just more financialization here.
So, who do you think pays for those franchise fees?! Hotel prices have gone up astronomically over the last 5 years and the highest prices hikes are the Brands in this video. This is the same thing happening in Las Vegas with MGM and Caesars where they have sold their properties and are now paid to manage these hotels (again, prices have gone through the roof!).
With regards to Vegas VICI properties is the biggest casino landlord. 😊They own the buildings and MGM and others (casino operators) are tenants. Imagine being the landlord to the casino business. It’s an ingeniously profitable business model. Blackstone is getting in on the game too. With regards to Marriott, take a look at it’s stock performance.. These businesses are built for the shareholders so deploy your capital appropriately
stumbled upon this on my recommendations, and i am impressed! i think it's common to choose a hotel you are more familiar with, especially with the trust people have if the hotel has a "by x company" because you can be in the other side of the world and can trust properties that are labeled as "by marriot, by wyndham, by hyatt," and the like
They figured out how to ruin their brand while turning their business into nothing but a brand. Put a Marriott sticker on a Motel 6. Nobody can afford to travel anymore anyway.
Having worked at a hotel I can also say that the owners of hotels also hire a management company typically to staff their hotel and run it for a percentage of the revenue/profit. And a lot of times if you get awful experiences it might not be the people at those hotels but rather the terrible management and lack of or micromanaging oversight and scrutiny you’re under. The hotel industry is tough in its own way and it’s not very kind. I came from one with awful management and they were kept because the books looked good despite the work morale and culture being diminished because the management company covered it all up.
Not only are most hotels a franchise but there are also management companies that the employees of those hotels actually work for and not the franchisee or the main name hotel.
I work for a best western but it's operated by a group the manages the employees of a Hilton, best Western and a holiday inn, all within 5 miles of each other
@wsj Here's another intriguing story worth exploring: Service Properties Trust (SVC), which you briefly highlighted. Amid the pandemic, they recognized the cost efficiency of operating under their own flag (Sonesta hotels) and not partnering with brands or other operators. Consequently, they terminated contracts with major players such as Marriott, Hilton, IHG, and Hyatt, effectively reshaping their company virtually overnight.
@@piphastings6734 Right! An entire hotel brand born out of a company taking advantage of the pandemic to get out of contracts with the major operators. SVC required minimium income targets to be met and of course - no one was staying at hotels during the pandemic so the brands could not afford to pay these costs and thus were in breach of contract. Hope WSJ picks this up!
As someone who works for Hyatt, I can tell franchise hotels decrease the quality of the standars and the way employees are managed, as long as you can pay the franchise fee corporate doesn't really care.
@@GameFuMaster true. And Hilton/a decent hotel chain’s customer care is 80% better than airBnB’s. Not higher simply because some hotel owners just DGA F.
True, but Hyatt makes more than 4x more revenue than Wyndham at a much smaller scale. It's all relative, sort of like the airline industry.. Southwest airlines flies more passengers per year than United but United makes more money per year.
As a former EDITION Abu Dhabi employee… they 100% are franchised out. To the point they tried to deflag Dubai EDITION opening night due to conflict with ownership… ownership won
Hotels across brands have become too inconsistent, especially in North America. And it's unacceptable that many in the US are still serving room service in boxes which came about because of the pandemic and not returning to full tray service. It's these owners trying to squeeze every last dollar they can out of their properties.
Just to make this clear (the video seems to suggest otherwise towards the end): the hotel industry is highly fragmented. Most hotels are small! Even Marriott as the biggest chain only holds a relatively percentage of market share world-wide: “Based on lodging industry data, we have an approximately 16 percent share of the U.S. hotel market and a four percent share of the hotel market outside the U.S. (based on number of rooms).“ (from their 2023 annual report)
Unstated here is those employees don't work for the big brands meaning they don't get those benefits, nor the discounts that they'd normally get. Human capital expenditures drop considerably, but so do the benefit for staff.
Hotel franchises put their reputation on the line while the actual hotel operator just laughs in the face of guests complaining about their falling quality and standards. This is the kind of business model that will make these premium brand slowly lose its association with luxury.
I book Marriott because I have status though my Amex and I book them consistently for work so I can use the rewards when I am on vacation. it all checks out
How about enforce property owners to respect brand guidelines, and elite benefits, instead of letting them run away without any repercussion? If you treat yourself as a glorified OTA, then us customers act like so. I only go out of my way to stay at Hyatt. Marriott and Hilton don’t get my loyalty.
Because the hotel can just switch brands with little business interruption. It's like amex demanding target to have lower prices if they want to accept amex cards. How well is that going to be received.
Yep Marriott is winning big on Hotels branding in the South Pacific and bought hotels previously owned by Starwood Hotels and Resorts, when JW Marriott bought the brand back in 2016.
Recently at a TX doubletree Hilton a little 12 year old died in the pool bc of an exposed pipe… this explains why the mom couldn’t sue the actual Hilton company… such a sad story of something that could’ve been prevented… and just sucks that this is how they work. I’ve noticed a decline in some of the chains we frequent for vacation.
Great explainer video! I guess the hotel industry has learned from the fast food industry. What industry will follow this path next? Air travel? You operate a B737 and you get to slap a 'Singapore Airlines' on the side, if you manage it well.
This explains why the same chain, say Ramadas, from one hotel to the other can vary greatly in quality, amenities, pricing, etc. Why one location I think was lovely, I book at another and it's a dive. I have to figure out how to spot this stuff and get good ones, because price isn't it, and reviews from when I book to when I stay can change greatly. Plus I think they sometimes leave up old pics that make it look better than it is.
Brilliant illustration of the wealth transfer upward of the 1%, as hotel brands move to focus purely on profit generation and pass all risk down to independent operators who pay to have access to the global network and owners that shoulder all risk of construction and development
And the brands don't own or operate the properties. They're just selling their flags for a cut of the revenue. Isn't that basically a franchise? Or am I getting the whole video wrong?
I doubt they feel threatened by franchises flying their hotels under different banners. This is because most of Marriot's portfolio is specifically themed and stylized. Which would make it harder for franchisees to switch sides.
Thanks for explaining the reason behind my experience ( not a good one) in different Marriott. Believe Fairmont still manages property they put their name on, Fairmont Gold is my choice to stay, for now.
This makes a lot of sense now as to why even elite member service at Marriott is so awful and so incredibly awful at specific regions. Clearly, Marriott don't care enough to make sure their most loyal customers aren't getting shafted by not getting the benefits that they are supposed to. And this explains why so many specific hotels can get away with not offering breakfast to elite members or room upgrades. 2 prime reasons to even achieve platinum and up at Marriott. The worst part is that the 3 big chains appears to be colluding in prices in big cities like paris, London. They would just raise prices together and sometimes dynamically with the dollar. Meanwhile if you look at expedia for prices outside of those 3 you'll notice significantly lower prices. While I'll still retain my Hilton business I'm dropping Marriott permanently because I doubt anything will change with them in the next 5 years.
That is caused by a different issue. In US, nearly EVERYONE is an elite member, even gold is super common. They are so easy to get through Marriott credit cards. If you want to get room upgrades and special perks, you need to have higher tiers than most people (which is at least Platinum to Titanium in US). Elite member carries more value outside US. As for London, the price is probably driven up by frequent business travelers. Because free points and free elite status. Why not!
Wrong. If you look at Marriott and Hilton stocks they weathered the post pandemic market better than almost every sector. The way they made it sound during covid you would think their business was doomed but in fact I suspect they used that to cut a lot of cost at customers expense and why they both have had such good earnings.
This model does bring a lot of profit, but it only works because those big "hotel flags" are already established in the industry for a long time. They already have the data and experience for maximizing hotel performance, and they sell those data to the franchisees for a fee. This model indirectly hampers the growth of independent hotels and leaving the hotel industry to be monopolized by few players.
I noticed after the pandemic that every component of the travel industry - hotels, airlines, rental cars - had all jacked their rates in an obvious attempt to make up for revenues lost during the shutdown. But the pandemic ended three years ago, and in that time, airfare and car rental rates have moderated and come back down to reasonable amounts. Hotels have not. Rooms at the major hotel companies that should only be around $100 per night are still nearly double that. It takes some effort to plan travel now. It is possible to find reasonable rates at an outlet of the major brands, though it may mean staying further away from where I really want to be in order to keep the cost down. Either that, or booking at a lower quality hotel chain, something I'm not willing to do.
The absolute bane of the common person. Imagine getting a fair price or a good deal from a business with a full-time revenue manager and algorithms to outsmart you.
They know the average American is not going to do the work of finding the best price, read the fine print and do their homework more than one sitting in from of the computer. I literally spend 2 months monitoring hotel room prices in order to get an idea of the price ranges including point conversions. Who wants to do that and that's just 1 hotel.
Even gave Taylor Swift a shoutout for driving crazy prices. Most 2024 thing ever along with the grotesque tech driven drive of 'dynamic pricing' which more often than not isn't simply a demand & supply equation.
How does Marriott not being known by Marriott affect the customer? Reduction of quality. Lack of ability for the customer to know who is responsible for the property.
I guess Hilton owns a much higher percentage of their hotels since they weren’t listed with Marriott and Hyatt as owning only 1 to 2 percent of their hotels.
That's what I think too and the reason why my room upgrade chances with Hilton is 80% and with Marriott it's more like 30%. Except San Diego areas where both of them are 0% in the last 7 years and I go there often.
And that comes with extremely poor reviews by the hotelier magazine with all aspects of the “Hospice” metrics going down in the opposite direction. The question is WHY it is in practice still? Choose the right answer: 1) easier to get-out. 2) rooms for not having an extensive health coverage. 3) Encourage Local beauty pageants!!
Ok this makes sense, lower end hotels are not even necessary at attractive real estate locations. Why not rent your brand for those and concentrate your resources and management skills on the upper scale where the real money is
I just hope that this industry consolidation doesn't lead to consumer price gouging and getting nickel and dimed left and right, like what usually happens with corporate monopolies!
The franchising strategy adopted by Marriott and others is a brilliant move that has drastically scaled their growth while minimizing risk. This model showcases how brands can leverage their reputation and systems to ensure profitability and brand consistency without the direct costs of property management.
Bottom line, Marriott has sold out their control of quality and good customer experience for fast growth. Short term return for investors, who cares about our reputation if it doesn't affect the stock price this quarter.
THIS is why basically every hotel feels like a 2-star experience. Unless you will pay $600+ a night at a 5-star hotelt, you are going to get the 2-star "franchise" experience smh. And it is still not cheap!
Hotels lately suck! They all worry about saving a buck, that the quality has sugfered! Id rather stay at independent hotel than a brand name if the service and quality are there. I think its time to start a hotel brand
Yes and your product has suffered because of it! I’ve stayed at Marriott hotels that were on par with Days Inn. It’s very inconsistent and very telling.
![[MV] A leap of faith...ความเชื่อใจครั้งสุดท้าย (From "Petrichor the series")](http://i.ytimg.com/vi/U1piZH2CNXA/mqdefault.jpg)
Hyatt is smaller than its hotel chain competitors. So how did it get to be the most expensive? Watch the Economics of Hyatt: on.wsj.com/3xt9yNf
How did Marriott become the largest hotel chain, with over 30 brands? Marriott’s CFO explains why this is just the beginning for the hospitality giant: on.wsj.com/3xhNqpb
@@jasonk125this seems to be focused on the US market, IHG is a european brand.
What a complex way of explaining that many hotels are franchisees.
Its a TH-cam vid they need attention
That’s what I was thinking
Can't make a long video with 1 sentence, eh?
I love being a Hilton Diamond Member.. especially staying at overseas Hilton properties, you get treated like a millionaire lol
didn't ask lil bro @@ninzki143
I’ve seen a shift in Marriott hotels where the quality is inconsistent. This makes a lot of sense.
No it's always been like that. I know plenty of folks who own Marriott and igh hotels. It's nothing new
Marriott loyalty program is inconsistent, bizarre and unsettling. I don’t like have to debate and argue with mgt. 👎
@@newagain9964 ah debate and argue with mgt. is fun...then you can insult them....to their face...
There are certain brand standards owners have to follow in order to operate under a certain name; but yes it does become inconsistent sometimes as some owners care more about operations than others.
Based on the video, you just have to stay at the 5 star level-luxury to have a consistent quality
This is why most hotels are a complete crapshoot on what you get. Very little consistency in physical product, amenities, and especially service. Breakfasts are weaker, housekeeping services reduced, loyalty recognition is greatly minimized. Not saying every chain hotel was perfect before, but ever since the pandemic and the offloading of property by the chains, the service has gone downhill at nearly every hotel I have stayed at.
❓️ Franchise system only existed post pandemic?
That are exactly my thoughts!
Yet AirBnB still managed to be worse 😂
polarspacebear: As the video notes, Marriott/Hilton made the decision to go "asset-lite" decades ago. The franchised hotel model dates back to the early 1970's...this was not an idea that took hold post pandemic. Your experience is not unlike any business post-pandemic...harder to find staff, etc. Not due to a dramatic shift in who owns the hotel real estate.
@@siewheilou399 I didn't say that. But they are complementary factors
as a former hotel worker. the real loser here is the loyalty customers, it's literally a sign on the front door. that's it. nothing special about the hotel. use your brain, look at all hotels individually and pick what you like for a price you are willing to pay.
Yeah but people want to take a selfie in front of that Sign or they want to spit out 'I stayed at Marriott. It was so nice hehe'
The quality has gone way down. I was in a Hilton recently where they were charging $50 per night for a mini-fridge - the same kind of fridge you can get for $120 from Costco, and which used to be supplied in every hotel as standard
Do you have any statistical Analysis of this?
It's funny how the CEOs of the hotel companies, who make money from selling their brand, *look* like rich people; while the MCR CEO looks like a used car salesman.
He's not the owner of the properties, just the operating partner.
@@PalaundDidn’t the video and him say he was the owner of the properties who also operated them? The brand don’t own or operate the hotels.
They want to look presentable. What’s wrong with that?
They are pandering to their audience and brand image. You really think the MCR CEO can't afford a suit and nice watch?
I’m sure those hotel executives are doing just fine.
I used Marriott almost exclusively for 17 years of business travel. Now that I'm retired, I've found that IHG is a much better value and the service is much more consistent. Also, as a lifetime Platinum with Marriott, I used to get upgrades quite often pre-COVID but haven't seen one since.
Platinum level is no longer the highest ranking tier. There is not Titanium and Ambassador, those guest receive priority upgrades over Platinum now.
SPG was the Top until Marriott bought it. I got 10 years of the most undisputably amazing membership with SPG. Still got the many gifts and SPG "NO BLACKOUT"points. Today that concept is hardly doable.
Shoutout to the stock footage of random people at the Berlin-Brandenburg airport.
Hahahaha
lol
When I heard the CFO of Marriott say "we are the largest, 8700 hotels in 139 countries and territories, really showing expertise around the world for what we think hospitality means", I thought this meant, you know, making a nice hotel for guests. Turns out this is left to the franchisees, and what hospitality means to Marriott is figuring out how to charge as much as "the market can bear", and setting up anti-competitive loyalty programs to stop customers from shopping around outside of their flag.
While that true, what they also have is data to tell the franchises what attracts customers in terms of what makes a customer happy with their hotel choice, amenities, room layout/style etc.
Anti-competitive. You don't have to join the loyalty program. You can just pay for the hotel you need.
And overtime, the marriot, hilton, etc will slowly go down hill. A fact they acknowledge within this video. When you loose control over quality standardization, it becomes inevitable that the brands reputation looses value as well.
Hard to go downhill when u make up the majority of the market.
They have strict QA requirements
Not necessarily. If they go the McD's route, they can impose strict standards & plenty of brand-support (design, suppliers, advice on where/how to locate, etc). The issue is that they are *also* going the Subway route - allowing way too many franchisees in smaller markets, or in close-proximity in larger markets, such that supply exceeds demand. Outsourcing the risk in this way can be good for all parties, but you have to impose some reasonable limits.
@@mandisaw everything from your second sentence still stands true. They are just trying to sell as many of their brands to owners as much as possible. As long as the hotel is making money off royalties they don’t care. Even if margins are thin for the owner. But yeah if margins are thin for the owner, it’s harder for the owner to keep up with new brand requirements and renovation cycles which require a lot of capital at times.
many fastfood brands are franchises too and they onlu go up hill ?
I work at a Marriott trust me if your service sucks its because quality of work has been destroyed. We have been reduced to so few workers we cant keep up. They made a new building where i work at . Never hired more people. Trust me it sucks to the extremes. All of our best employees that were diamond left my Marriott and found better jobs and that was in every department btw.
that has nothing to do with franchising, Marriott has franchised decades ago.
@@kingderpington6082 this has nothing to do with what im writing
@@Sololeveler344 you say that while commenting on a video about Marriott franchising their business?
@@kingderpington6082he's talking about being understaffed and worked to the bone. Stay in school because you clearly can't read.
Its worse here, our economy is like a flailing fish, fighting for its life. The normal state of the U.S. economy is actually very bad. Because of this it goes into convulsive spasms fighting to grow any way it can out of desperation. Tricks, gimmicks, rule changes try to stimulate the economy and prevent it from falling but they only bring temporary relief to people since, when you factor in inflation we are declining.
People believe their currency has the worth it does because they have no other option. Even in a hyperinflationary environment, individuals must continue to use their hyperinflationary currency since they likely have minimal access to other currencies or gold/silver coins.
Inflation is gradually going to become part of us and due to that fact any money you keep in cash or in a low-interest account declines in value each year. Investing is the only way to make your money grow and unless you have an exceptionally high income, investing is the only way most people will ever have enough money to retire.
I've tried investing in the stock market several times but always got discouraged by fluctuations of stock value. I would be happy if you could advise me based on how you went about yours, as I am ready to go the passive income path.!!
My CFA NICOLE ANASTASIA PLUMLEE a renowned figure in her line of work. I recommend researching her credentials further... She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Just ran an online search on her name and came across her websiite; pretty well educated. thank you for sharing.
We seem to do a whole lot of the asset light business model here in the US. Outsourcing Manufacturing, Uber , Air BNB , Hotel ownership , Franchised Restaurants , Finance , Call centers, health insurance . Capital likes to take the path of least resistance It's no wonder other countries are growing their economies. It's just more financialization here.
Great insight but I don't understand how the impact comes about. Explain please
Time for Monopoly to update the game rules. lol
Landlordgame² ;)
Capitalism, amiright? 😅
So, who do you think pays for those franchise fees?! Hotel prices have gone up astronomically over the last 5 years and the highest prices hikes are the Brands in this video. This is the same thing happening in Las Vegas with MGM and Caesars where they have sold their properties and are now paid to manage these hotels (again, prices have gone through the roof!).
With regards to Vegas VICI properties is the biggest casino landlord. 😊They own the buildings and MGM and others (casino operators) are tenants. Imagine being the landlord to the casino business. It’s an ingeniously profitable business model. Blackstone is getting in on the game too.
With regards to Marriott, take a look at it’s stock performance.. These businesses are built for the shareholders so deploy your capital appropriately
Now I know which day to book - Sunday. Thanks for the tip.
The only real takeaway. Weird to me because I always see Sunday as the most expensive hotel day
@@Trainsallday Yes, it was weird to me to. But the logic is that both the leisure & business people opt out on Sundays.
stumbled upon this on my recommendations, and i am impressed! i think it's common to choose a hotel you are more familiar with, especially with the trust people have if the hotel has a "by x company" because you can be in the other side of the world and can trust properties that are labeled as "by marriot, by wyndham, by hyatt," and the like
Marriott sucks these days. They are all the same econo box hotels below a certain category
😂
I guess you never visit Marriott's high end luxury hotels 😅
They figured out how to ruin their brand while turning their business into nothing but a brand. Put a Marriott sticker on a Motel 6. Nobody can afford to travel anymore anyway.
Marriott provides the most overpriced rooms and bizzare and mediocre loyalty program.
Their post-COVID policy of only cleaning rooms once every 2 days "to protect the environment" is quite irritating.
Having worked at a hotel I can also say that the owners of hotels also hire a management company typically to staff their hotel and run it for a percentage of the revenue/profit. And a lot of times if you get awful experiences it might not be the people at those hotels but rather the terrible management and lack of or micromanaging oversight and scrutiny you’re under. The hotel industry is tough in its own way and it’s not very kind. I came from one with awful management and they were kept because the books looked good despite the work morale and culture being diminished because the management company covered it all up.
Not only are most hotels a franchise but there are also management companies that the employees of those hotels actually work for and not the franchisee or the main name hotel.
I work for a best western but it's operated by a group the manages the employees of a Hilton, best Western and a holiday inn, all within 5 miles of each other
and watch youtube content about marriott and hyatt?? get a life my guy!
I didn't expect the hotels have such level of complexity in their business model. Maybe you can feature the nature US hospital businesses too.
I don't look at brand nowadays
reviews are more accurate
@wsj Here's another intriguing story worth exploring: Service Properties Trust (SVC), which you briefly highlighted. Amid the pandemic, they recognized the cost efficiency of operating under their own flag (Sonesta hotels) and not partnering with brands or other operators. Consequently, they terminated contracts with major players such as Marriott, Hilton, IHG, and Hyatt, effectively reshaping their company virtually overnight.
Great point....all of a sudden, I saw this name "Sonesta" in the past couple of years pop up.
@@piphastings6734 Right! An entire hotel brand born out of a company taking advantage of the pandemic to get out of contracts with the major operators. SVC required minimium income targets to be met and of course - no one was staying at hotels during the pandemic so the brands could not afford to pay these costs and thus were in breach of contract. Hope WSJ picks this up!
This is gooooood! I love these kinds of informative videos WSJ!!!
you didnt know this? LOL
@@maxjb9941Americans don’t really know much…except falsities.
As someone who works for Hyatt, I can tell franchise hotels decrease the quality of the standars and the way employees are managed, as long as you can pay the franchise fee corporate doesn't really care.
Good job WSJ!! Great storytelling and very informative.
They are playing the McDonald’s play book!
Not really
McDonald's owns about 70% of the buildings and 45% of the land at its locations worldwide. So quite a bit different.
Hilton, Hyatt and Marriott don’t mean much in Australia.
However Accor is massive here, but the membership systems work as we only book Accor hotels.
Hilton is just basically airBNB.
All of them are. Except we hope they have a higher quality standard. Hope is the key word
They probably do in most parts of the world outside the US.
@@newagain9964 well generally they also don't come with surprise cleaning fees or whatever when displaying prices
@@GameFuMaster true. And Hilton/a decent hotel chain’s customer care is 80% better than airBnB’s. Not higher simply because some hotel owners just DGA F.
Wyndham is much larger than Hyatt, but I guess they could get Hyatt to talk on camera. Nice video and information!
True, but Hyatt makes more than 4x more revenue than Wyndham at a much smaller scale.
It's all relative, sort of like the airline industry.. Southwest airlines flies more passengers per year than United but United makes more money per year.
That's why hotel reviews are more important than ever.
It's just like restaurants, franchises. Everyone's doing it. Some retail chains do it as well.
That woman has joined the Night King!
for real lol
bro her eyes are crazy! she's definitely been beyond the wall @@RAJohnson713
Or Diary of a Vampire
As a former EDITION Abu Dhabi employee… they 100% are franchised out. To the point they tried to deflag Dubai EDITION opening night due to conflict with ownership… ownership won
Hotels across brands have become too inconsistent, especially in North America. And it's unacceptable that many in the US are still serving room service in boxes which came about because of the pandemic and not returning to full tray service. It's these owners trying to squeeze every last dollar they can out of their properties.
Just to make this clear (the video seems to suggest otherwise towards the end): the hotel industry is highly fragmented. Most hotels are small! Even Marriott as the biggest chain only holds a relatively percentage of market share world-wide: “Based on lodging industry data, we have an approximately 16 percent share of the U.S. hotel market and a four percent share of the hotel market outside the U.S. (based on number of rooms).“ (from their 2023 annual report)
Unstated here is those employees don't work for the big brands meaning they don't get those benefits, nor the discounts that they'd normally get. Human capital expenditures drop considerably, but so do the benefit for staff.
Wonder if hotel brands points business now is worth more than the hotels business (just like Airlines and their miles)?
Hotel franchises put their reputation on the line while the actual hotel operator just laughs in the face of guests complaining about their falling quality and standards. This is the kind of business model that will make these premium brand slowly lose its association with luxury.
I book Marriott because I have status though my Amex and I book them consistently for work so I can use the rewards when I am on vacation. it all checks out
How about enforce property owners to respect brand guidelines, and elite benefits, instead of letting them run away without any repercussion? If you treat yourself as a glorified OTA, then us customers act like so. I only go out of my way to stay at Hyatt. Marriott and Hilton don’t get my loyalty.
Because the hotel can just switch brands with little business interruption. It's like amex demanding target to have lower prices if they want to accept amex cards. How well is that going to be received.
Yep Marriott is winning big on Hotels branding in the South Pacific and bought hotels previously owned by Starwood Hotels and Resorts, when JW Marriott bought the brand back in 2016.
I'm really loving this new peveat the WSJ is doing to other topics beside crazy politic, and cancel culture stuff.
Recently at a TX doubletree Hilton a little 12 year old died in the pool bc of an exposed pipe… this explains why the mom couldn’t sue the actual Hilton company… such a sad story of something that could’ve been prevented… and just sucks that this is how they work. I’ve noticed a decline in some of the chains we frequent for vacation.
Orlando is a great example. The most remarkable Peabody hotel on International drive was sold to Hyatt. I miss that style
Gouge pricing
Dynamic pricing.
4:18 i honestly travel TO destinations on Sundays 💯💯😩😩😩 i noticed flights and hotels are waaaaay cheaper on those days and i like that 😩
Great explainer video! I guess the hotel industry has learned from the fast food industry. What industry will follow this path next? Air travel? You operate a B737 and you get to slap a 'Singapore Airlines' on the side, if you manage it well.
This is already sort of a thing. Some airlines don't own their aircraft, they lease them from a 3rd party.
This explains why the same chain, say Ramadas, from one hotel to the other can vary greatly in quality, amenities, pricing, etc. Why one location I think was lovely, I book at another and it's a dive.
I have to figure out how to spot this stuff and get good ones, because price isn't it, and reviews from when I book to when I stay can change greatly. Plus I think they sometimes leave up old pics that make it look better than it is.
the code that dynamically sets the prices in platform according to the demand amazes me
It's a basic math function. How many rooms are left - up the price when there are fewer.
yes thats why you stay at independant small business owners not these big corporate brands
MCR is a car wreck - I stayed in one of their properties for 3 years and I question how they are still in business
Calling packet rolled oats and skim milk as break fast is just ridiculous
Or you’ll be fortunate enough to get $10 breakfast credit at restaurant. Marriott 😑. Where coffee is $7. A muffin is $5
What an interesting video, quality content.
Brilliant illustration of the wealth transfer upward of the 1%, as hotel brands move to focus purely on profit generation and pass all risk down to independent operators who pay to have access to the global network and owners that shoulder all risk of construction and development
So they are franchises basically?
The franchise restaurant chains, eg McDonalds, require a local business person to own (or lease) the property, and operate the business.
And the brands don't own or operate the properties. They're just selling their flags for a cut of the revenue. Isn't that basically a franchise?
Or am I getting the whole video wrong?
No. There are owned, managed and franchise hotels carrying those flags.
Basically, yes.
Yes it is precisely a franchised hotel.
And this is why a privately owned "boutique" hotel is a better option in most cases. Marriott is quickly becoming the McDonalds of hotels.
Fantastic way to use analytics 📈
I doubt they feel threatened by franchises flying their hotels under different banners. This is because most of Marriot's portfolio is specifically themed and stylized. Which would make it harder for franchisees to switch sides.
very informative, thanks!
Very informative, very humble, keep up the awesome videos. I will follow you ,I liked this trading nice very good very interesting
Wow, the wall street journal actually doing some journalism for once.
Thanks for explaining the reason behind my experience ( not a good one) in different Marriott. Believe Fairmont still manages property they put their name on, Fairmont Gold is my choice to stay, for now.
This makes a lot of sense now as to why even elite member service at Marriott is so awful and so incredibly awful at specific regions. Clearly, Marriott don't care enough to make sure their most loyal customers aren't getting shafted by not getting the benefits that they are supposed to. And this explains why so many specific hotels can get away with not offering breakfast to elite members or room upgrades. 2 prime reasons to even achieve platinum and up at Marriott. The worst part is that the 3 big chains appears to be colluding in prices in big cities like paris, London. They would just raise prices together and sometimes dynamically with the dollar. Meanwhile if you look at expedia for prices outside of those 3 you'll notice significantly lower prices. While I'll still retain my Hilton business I'm dropping Marriott permanently because I doubt anything will change with them in the next 5 years.
That is caused by a different issue. In US, nearly EVERYONE is an elite member, even gold is super common. They are so easy to get through Marriott credit cards. If you want to get room upgrades and special perks, you need to have higher tiers than most people (which is at least Platinum to Titanium in US). Elite member carries more value outside US.
As for London, the price is probably driven up by frequent business travelers. Because free points and free elite status. Why not!
@@erebuxynot only are u conflating the issues, but ur blaming the customer for the problem created by the (greedy and sleazy) seller. 🥱🙄
Thus, the service portion for Marriott is inconsistent especially depending on the management companies that run the day by day.
Thank you for letting us know that hotel stocks are worthless.
Quite the opposite.
Wrong. If you look at Marriott and Hilton stocks they weathered the post pandemic market better than almost every sector. The way they made it sound during covid you would think their business was doomed but in fact I suspect they used that to cut a lot of cost at customers expense and why they both have had such good earnings.
U explain very well
Some similarities to car dealerships economics. But still vastly different
idk why some ppl are saying this vid is complicated. to me, it was simple n linear.
Well, that's the most attractive journalist I've ever seen.
Simp
15 years ago Marriot was a high end name that I couldn't afford to stay at, now I'd rather pass on it in favor of nicer or better value places.
This model does bring a lot of profit, but it only works because those big "hotel flags" are already established in the industry for a long time. They already have the data and experience for maximizing hotel performance, and they sell those data to the franchisees for a fee.
This model indirectly hampers the growth of independent hotels and leaving the hotel industry to be monopolized by few players.
I noticed after the pandemic that every component of the travel industry - hotels, airlines, rental cars - had all jacked their rates in an obvious attempt to make up for revenues lost during the shutdown. But the pandemic ended three years ago, and in that time, airfare and car rental rates have moderated and come back down to reasonable amounts. Hotels have not. Rooms at the major hotel companies that should only be around $100 per night are still nearly double that. It takes some effort to plan travel now. It is possible to find reasonable rates at an outlet of the major brands, though it may mean staying further away from where I really want to be in order to keep the cost down. Either that, or booking at a lower quality hotel chain, something I'm not willing to do.
In fact that many hotels are so difficult to bring the customers to enjoy the living of hotel. Hyatt isn't cheap hotel, luxury hotel
Dynamic pricing 🤦🏻♂️
dystopia
It's Capitalism.
The absolute bane of the common person. Imagine getting a fair price or a good deal from a business with a full-time revenue manager and algorithms to outsmart you.
They know the average American is not going to do the work of finding the best price, read the fine print and do their homework more than one sitting in from of the computer. I literally spend 2 months monitoring hotel room prices in order to get an idea of the price ranges including point conversions. Who wants to do that and that's just 1 hotel.
Even gave Taylor Swift a shoutout for driving crazy prices. Most 2024 thing ever along with the grotesque tech driven drive of 'dynamic pricing' which more often than not isn't simply a demand & supply equation.
always find your lessons very practical and applicable. Thank you for making trading so accessible!
How does Marriott not being known by Marriott affect the customer? Reduction of quality. Lack of ability for the customer to know who is responsible for the property.
I guess Hilton owns a much higher percentage of their hotels since they weren’t listed with Marriott and Hyatt as owning only 1 to 2 percent of their hotels.
That's what I think too and the reason why my room upgrade chances with Hilton is 80% and with Marriott it's more like 30%. Except San Diego areas where both of them are 0% in the last 7 years and I go there often.
I’m a Hilton Loyalist
And that comes with extremely poor reviews by the hotelier magazine with all aspects of the “Hospice” metrics going down in the opposite direction. The question is WHY it is in practice still? Choose the right answer:
1) easier to get-out.
2) rooms for not having an extensive health coverage.
3) Encourage Local beauty pageants!!
Good insight
Insightful
Ok this makes sense, lower end hotels are not even necessary at attractive real estate locations.
Why not rent your brand for those and concentrate your resources and management skills on the upper scale where the real money is
I just hope that this industry consolidation doesn't lead to consumer price gouging and getting nickel and dimed left and right, like what usually happens with corporate monopolies!
If people were more aware of this it would kill the brand name tho
Intriguing business model, didn't know this before! 😮
knew this from Business wars podcast :)
Easy money for Hotel operators. Cleaning expense is like $5 per day. Smh. Utilities and supplies another $5. They charge $300 per night is crazy.
very informative
The franchising strategy adopted by Marriott and others is a brilliant move that has drastically scaled their growth while minimizing risk. This model showcases how brands can leverage their reputation and systems to ensure profitability and brand consistency without the direct costs of property management.
Bottom line, Marriott has sold out their control of quality and good customer experience for fast growth. Short term return for investors, who cares about our reputation if it doesn't affect the stock price this quarter.
You are correct Marriott stock has beat the S&P 500 going back to its IPO in 1998
This has been the Four Seasons model for decades.
The member benefits have become increasingly diluted.
THIS is why basically every hotel feels like a 2-star experience. Unless you will pay $600+ a night at a 5-star hotelt, you are going to get the 2-star "franchise" experience smh. And it is still not cheap!
It is always demand/supply. People should stop staying in hotels which does NOT provide value for their money.
How does Wyndham compare? I seem to see a lot of their hotels now
Basically you pay for the brand, services are not included
Hotels lately suck! They all worry about saving a buck, that the quality has sugfered! Id rather stay at independent hotel than a brand name if the service and quality are there. I think its time to start a hotel brand
That's because they see a huge market crash and rising interest rates don't help.
Yes and your product has suffered because of it! I’ve stayed at Marriott hotels that were on par with Days Inn. It’s very inconsistent and very telling.