Hyatt receptive to having regional investor aboard

Dubai: Thomas Pritzker, 57, whose family founded the privately held Hyatt hospitality group half a century ago, was born and raised in Chicago. He holds a BA from Claremont Men's College, an MBA and JD degree from the University of Chicago. He is chairman of Hyatt and currently lives in Chicago.

Pritzker is impressed with the rapid growth in the region's travel trade and wants to grow Hyatt's presence in the Middle East and South Asia. Global Hyatt Corporation will bring 350 of its top managers and officials to Dubai this month for a company conference so that they could see "what the world can be", Pritzker told Gulf News in an exclusive interview.

Pritzker spoke from Chicago by telephone about Hyatt's growth plans. He said he is open to the idea of taking a Gulf-based investor on Hyatt's board.

GUlf News: You recently opened a development office in Dubai. Do you not think that you are a bit late in focusing on the region?

Thomas Pritzker: We have been active in the region for probably longer than our competitors. The Hyatt Regency opened in Dubai in 1982. We have three hotels in Dubai. We have been quite active in the region.

We have been running the business out of India. We have reorganised our regional structure to cover both India and the Gulf and some of the surrounding countries. We decided to house that development group in Dubai because there is a lot of potential development in the area.

Really, what we have done is two things: restructured our regions globally, and invested more in terms of human resources in the region. After we decided to do that we looked for where would be the logical place to locate, and Dubai became preferred.

What sort of new developments do you have in mind, and could you specify the countries outside the Gulf on your priority list?

We would look at probably similar places to our competitors. China obviously has great potential, India has great potential, Russia and former Soviet states too, and the Middle East. These are all areas that are growing at unusual rates. This is why we began to think about global expansion. We recognise that we had to both reorganise our strategy and invest in a larger development effort in order to take advantage of the markets that are developing.

What discussions are you having with potential investors in these regions? Would you also be investing your own money in hotels in these places?

As a general matter we are in the business of managing hotels, and you know most of our competitors are similarly situated. We do invest in hotels, but it has been historically very selective. Primarily, we envisage a strategy of managing hotels that are owned by others.

Could you give an indication about the deals under discussion?

We have been more conservative than most of the other hotel companies in terms of making announcements about new projects. We want to know that they are very real, on the ground, financed - that sort of thing. The reality is that there is quite a deep pipeline, but we have chosen to be more conservative in our approach to public statements. Part of that is we are a privately-held company, we have that luxury.

Could we see a change in the company's ownership structure at some point of time?

You may have read what we did at the end of August: we brought in two shareholders, the Walton family of Wal-Mart and Goldman Sachs. We did that for a variety of reasons. Part of that was that we felt that could strengthen Hyatt itself. Both of them have enormous presence not only in the US but worldwide. So you did see some change of ownership in 2007.

As far as speculation regarding our possibly becoming a public company, what we have said is that we are working to become what we call public-ready. And what I mean by that is that we have to have the ability to be public should that option be desirable.

Let me step back for a moment. We used to have two companies: Hyatt International and Hyatt US. We really ran them as two separate companies. As we saw the globalisation of the world we felt that it was important to have a single company, a single organisation, and so we created Global Hyatt. And as we began to look at how we could empower that organisation, we felt that what we want to do is to have the most flexibility and the most options possible. We did not have the ability to access public capital when we were in the old structure. It was too complex, there were a lot of non-hotel assets, and so even if we wanted to be public or access public debt or equity, we did not have the structure.

We have put together a board of directors that includes both family members and outside directors. We follow a public company governing structure, and a public company accounting structure. We have taken the steps that would be necessary.

As to whether we would pull the trigger or how we might pull the trigger, we really have not had to make any decision. We continue to build the company, and if at some point that [going public] becomes advantageous then we would do it.

Are you open to the possibility of Gulf investors taking a stake in your company?

We have not really seen that yet out of the Gulf. Of course, we have the impression that there has been some discussion within the Gulf whether they will invest in some of existing chains or whether they feel it is better to start their own companies. We have a lot of friends in the Gulf. They obviously have capital; they need to deploy it. Real estate is something that they understand and makes sense to them. And the hotel business is an interesting business. It allows a global window for seeing what is going on around the world and a global window for investing.

So, could I envisage bringing in a Gulf partner? Yes, I will be very receptive to that. What we really are looking at is investors who are aligned with our vision.

We spent a lot of time with both Goldman and Walton talking about that. Frankly, most of the discussion was about that, very little was about negotiating price or terms. What is ultimately most important for us is to have an alignment between management, board of directors and shareholders. Someone who understands how we think about the business, how we think about Hyatt and have similar goals, which are long-term and expansion oriented.

How do you view the overall tourism situation in the Gulf? Do you see long-term growth?

Dubai has developed and grown. Dubai and the Gulf states have really established a permanent role in the travel and hospitality industry, as well as in the resort and entertainment industry. I don't think this is something that is going to go away. Dubai has a very desirable environment in a lot of different ways: physically, politically and economically. We are focused on the region, we have set up an office, and we think it is the right thing to do over the long term.

Are there any particular challenges to doing business in the Gulf?

There are challenges everywhere: Chicago, New York, London, Beijing, etc. Actually, our experience is, we find the Gulf easier and more receptive and more business-oriented than many other places globally.

We are bringing 350 general managers and our board of directors to Dubai. The reason we are doing that is we want them to experience what the world can be. We want to make sure that the leadership of our company sees it and understands it. If you talk about the Emirates, they really have done a remarkable job of being business-oriented, while at the same time retaining their values. So what we want to do is to be part of that community that both respects its values and at the same time is receptive to business. We love doing business there.

In numbers: Worldwide operator

Global Hyatt operates more than 750 hotels and resorts worldwide, including eight in the Middle East. It has aggressive regional expansion plans. In January, the company opened its Southwest Asia office in Dubai to manage four existing properties in the Gulf region and six in India. It will look after new developments in the region.

Hyatt, which first entered the region in 1980, operates three hotels in Dubai. It has 18 new projects in progress across the Gulf and India and these are scheduled for completion by 2013. The company says it wants to capitalise on "demonstrable consumer preference for Hyatt brands".

The company aims to triple its number of properties in Southwest Asia over the next five years.

It manages 140,000 rooms in more than 45 countries. Its portfolio comprises Park Hyatt, Grand Hyatt, Hyatt Regency, Hyatt Resorts, Hyatt, Hyatt Place, Hyatt Summerfield Suites and Andaz brands.