Diversification from a traditional business model can have its pitfalls, as Hyatt learned recently. The hotel giant has had to take a huge impairment charge related to its investment in Oasis, a homesharing platform the group bought into last year. We find out more.

Oasis posing problems

It might have seemed like a savvy move for Hyatt Hotels to branch out and get its finger in the homesharing pie. Its peers in the hospitality industry have been doing the same, but it hasn’t proved to be quite the success that Accor or Hyatt were hoping for. Last year, Hyatt made a large investment into luxury homesharing platform Oasis, but the group said at the beginning of August that it had had to take a $22m impairment charge for the Oasis deal. Hyatt chief financial officer Pat Grismer said, “That impairment relates to Oasis, which is the alternative accommodations investment that we made last year. Oasis has underperformed our expectations as it relates to the scalability of that business and the synergies to be realized through the alliance with Hyatt. The business has consistently experienced shortfalls in operating cash flow and so, as a consequence, we felt that it was prudent to impair our investment to date.”

Tricky transition

The traditional business model of hotels is something that Hyatt, Accor and Marriott are expert at maintaining, but perhaps the same cannot be said for their management of the sharing platforms they have integrated into their respective portfolios. As well as Hyatt’s $22m impairment charge, Accor too has had to deal with losses from their purchase of OneFineStay, writing off $288m from its investments. It seems to be the case that dealing with such distinct business models is a tricky thing for hotel groups.

The difficulty appears to lie in the nature of the type of properties – a house being effectively a private entity, while a hotel is somewhat public. Onefinestay CEO Javier Cedillo-Espin expanded on the issue, saying, “Homes are not made for industrial use … so there’s always tremendous need for professional care, maintenance of homes, and also professional service that goes on behind the scenes, to be able to solve those issues when things go wrong.” This level of upkeep on private properties is clearly something that hotel groups had not expected, and effective management of a hotel does not translate into effective management of a house.

Perseverance

Despite the trials facing hotel groups that have delved into the realm of homesharing, it would be unwise of them to opt out at this early stage. These offerings are still hugely popular with guests, and give these big hotel groups a competitive edge in an already saturated market. These issues could be seen as mere teething problems, and hotel groups need to perhaps rethink their strategy when it comes to managing these new endeavours, but perseverance will no doubt pay off profitably in the long run. For more information, click here. Let’s take a look at a few other projects currently underway by Hyatt Hotels Corporation:Hyatt Place Zurich Airport
Hyatt Hotels Corporation (NYSE: H) announced that a Hyatt affiliate has signed a management agreement with Flughafen Zurich AG for a Hyatt Regency and a Hyatt Place hotel in Zurich.  …[READ MORE]Park Hyatt Msheireb Downtown Doha
Park Hyatt Hotel is located at an important intersection between Musheireb Street and Abdullah Bin Thani Street, acting as a southern gateway to Msheireb Downtown Doha  …[READ MORE]Hôtel du Louvre
Hotel du Louvre entered the Hyatt brand family with its identity intact and will be marketed initially as Hotel du Louvre. Following a renovation.  …[READ MORE]More information on Hyatt hotel projects can be found in the TOPHOTELPROJECTS database. TOPHOTELPROJECTS is the specialized service provider of cutting-edge information of the hospitality industry.

Pin It on Pinterest

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.

Close