A contract dispute may cause 22 Hyatt Place properties in the US to leave the Hyatt portfolio. Let’s take a look at why, and which properties could be impacted. This follows a similar recent situation with 103 IHG properties and 122 Marriott properties.
In this post:
Hyatt & SVC are at an impasse
Hyatt doesn’t actually own most of its hotels, but rather the individual properties are largely owned by investment companies, and Hyatt has a management or franchise contract. Service Properties Trust (SVC) has historically owned a variety of hotels across major hotel groups.
SVC has announced that it has received a notice of termination from Hyatt with respect to management of 22 Hyatt Place hotels. According to SVC:
- Hyatt’s obligation under the management agreement requires minimum returns of $22 million annually, and it’s supported by a $50 million limited guaranty
- While Hyatt is currently making payments to SVC, the $50 million guaranty was recently exhausted
- As a result, Hyatt may terminate the agreement within 90 days notice once the guaranty has been fully utilized
- That means the termination could happen as soon as April 8, 2021
- SVC and Hyatt are in discussions regarding possible changes to the management agreement that would enable some or all of the hotels to remain Hyatt Place properties; however, if this doesn’t lead to an acceptable agreement, SVC expects to transition management contracts of these properties to Sonesta
Hyatt isn’t meeting its obligations on all Hyatt Place properties
Which Hyatt Place properties could rebrand?
Here are the 22 Hyatt Place properties that are owned by SVC, and that could potentially leave Hyatt:
- Hyatt Place Tempe Phoenix Airport
- Hyatt Place Tucson Airport
- Hyatt Place Colorado Springs Garden Of Gods
- Hyatt Place Orlando Airport Northwest
- Hyatt Place Atlanta Airport South
- Hyatt Place Atlanta Duluth Gwinnett Mall
- Hyatt Place Atlanta Cobb Galleria
- Hyatt Place Fort Wayne
- Hyatt Place Indianapolis Airport
- Hyatt Place Kansas City Overland Park Convention Center
- Hyatt Place Detroit Utica
- Hyatt Place Kansas City Airport
- Hyatt Place Charlotte Airport Lake Pointe
- Hyatt Place Mount Laurel
- Hyatt Place Columbus Dublin
- Hyatt Place Nashville Northeast
- Hyatt Place Austin North Central
- Hyatt Place Dallas North
- Hyatt Place El Paso Airport
- Hyatt Place San Antonio Riverwalk
- Hyatt Place Chantilly Dulles Airport South
- Hyatt Place Sterling Dulles Airport North
22 Hyatt Place properties could leave Hyatt
What is SVC’s strategy with Sonesta?
If you’re not familiar with the backstory, you may be thinking to yourself “well, yeah, Hyatt hasn’t provided the promised returns, but these are unprecedented times, and it’s not like these hotels will get better results if managed by a different group.”
The point you’d be missing is that SVC owns a 34% stake in Sonesta, so the company is doing everything it can to grow the Sonesta portfolio. At the beginning of 2020 Sonesta was virtually unheard of, but with IHG and Marriott acquisitions, the group is up to hundreds of hotels.
On top of that, Sonesta is acquiring Red Lion Hotels, meaning the group will truly play in the big leagues when it comes to the number of properties and rooms in its portfolio. SVC is clearly looking for more opportunities to have hotels join Sonesta, and this is a convenient excuse. Sonesta also has a pretty robust loyalty program, called Travel Pass.
The Sonesta brand is growing at an incredible rate
Bottom line
In April 2021 we could see 22 Hyatt Place properties in the US leave the Hyatt portfolio, and be rebranded as Sonesta properties. This dispute isn’t quite as far along as it was with IHG and Marriott, since so far all payments have been made, though that will be changing.
Personally I’d be surprised to see these properties stay part of the Hyatt portfolio, given how determined SVC is to grow Sonesta.
Would you be sad to see any of these properties leave the Hyatt portfolio?
(Tip of the hat to LoyaltyLobby)
Well Sonesta better do something about Austin North!, cause they offer Nothing that they say they offer!!! They do offer however a green pool, whose pumps don’t work and they don’t own a net on the pool skimmer to skim the top of the pool! It’s a joke!!!
Ben did this happen?
The Dallas North location is where the 'trial' breakfast offering changes started, I alerted Leff about it after a confusing stay where, at the time, my Explorist status was all that got me the crappy continental breakfast. It seems they've been pushing the Hyatt buttons for some time now, why would Hyatt give up now?
I could have sworn that I saw a couple of people setting up a laptop/camera in front of the Hyatt Place in Page, AZ and taking the first pic to this article...?
Apart from changing the brand of toiletries will there be any noticeable changes for guests?
@Quo Vadis?
Thank you so much that was helpful.
I have a points booking at one of these properties in July. What would happen with my stay?
@Brian G,
If you're doing a multi-week mattress run, might as well check both of them out. Stayed at the HP in Chantilly back in October and thought it was meh overall, the curved shower curtain rod was loose and sagged a little, and the breakfast was only cold items. The HP in Sterling does cold breakfast also, but is usually a little cheaper and much closer to where we live, so we've mostly stayed...
@Brian G,
If you're doing a multi-week mattress run, might as well check both of them out. Stayed at the HP in Chantilly back in October and thought it was meh overall, the curved shower curtain rod was loose and sagged a little, and the breakfast was only cold items. The HP in Sterling does cold breakfast also, but is usually a little cheaper and much closer to where we live, so we've mostly stayed there. On a scale of 1 to 10, I'd rank the HP in Sterling one point higher.
FYI, if you ever redeem 5000 points for a Category 1, local-area Hyatt, check out the Hyatt Regency Dulles. The rooms there are pretty nice, offer good views of Dulles airport (if you get a high-floor room facing that way) and an open swimming pool. They charge $8/night for parking but it should be waived through Feb 28 on award stays. Hyatt Place Herndon/Dulles Airport-East also charges for overnight parking, but they offer hot breakfast (one serving of scrambled eggs and sausage links when you turn in your coupon/voucher). Looked like Ethiopian Airlines booked their flight attendants there (Herndon/Dulles East) when we stayed.
SVC has done this with ton of properties as we know. My question is, is this minimum return agreement standard with most hotels ? If so, is this why flags change and we usually don't hear about it because it's not 150 hotels at once?
Now if only Sonesta could add a property that anyone cared about staying at...
I will say, the Colorado Springs Garden of the Gods location is a nice inexpensive mattress run location for me.
Interesting. I stayed at the Hyatt Place in Duluth, GA near Gwinnett Place Mall in October, 2019. Strange design. It's the only hotel room I've ever stayed in that had a design where the bathroom was up against the outer wall of the building next to a window instead of close to the door into the room. Sadly, it wasn't in the best shape (my bathroom door wouldn't close all the way). For the $110...
Interesting. I stayed at the Hyatt Place in Duluth, GA near Gwinnett Place Mall in October, 2019. Strange design. It's the only hotel room I've ever stayed in that had a design where the bathroom was up against the outer wall of the building next to a window instead of close to the door into the room. Sadly, it wasn't in the best shape (my bathroom door wouldn't close all the way). For the $110 a night they were charging, I do expect better than that.
Also of note, this particular hotel is in an area with a bunch of other places (15 other hotels are located close to Exit 104 (Pleasant Hill Road) off of I-85). There are already 2 Sonesta properties within a mile and change of this place. There's a 10 or so story hotel on the other side of the interstate that's been a Sonesta since at least 2017 (and probably earlier), while they recently (within the last year or so) took over a former Candlewood Suites (likely part of that group of 103). My best guess is the Hyatt Place in Duluth gets rebranded as one of the Red Lion brands once the aforementioned purchase goes through.
Hyatt Place is one of the best select service hotels IMO.
They are among the most consistent properties and are always clean and up to date.
I have stayed at many Hyatt Places and have only positive things to say.
@Quo Vadis?
I am doing a mattress soon in NOVA. Of the two (Sterling Dulles Airport North &Chantilly Dulles Airport South) which property was easiest to deal with?
SVC is an aggressive company, but if somebody followed there stock value over the past years, it's easy to look back at much better times of that company!
Compared to the worth of there stock value it dropped dramatic in the last years by over 50%.
So maybe this is the aggressive way to try to beat others in the Property business?
Sonesta Hotels as one of there brands is luckily not...
SVC is an aggressive company, but if somebody followed there stock value over the past years, it's easy to look back at much better times of that company!
Compared to the worth of there stock value it dropped dramatic in the last years by over 50%.
So maybe this is the aggressive way to try to beat others in the Property business?
Sonesta Hotels as one of there brands is luckily not wide spread outside the US as the big majority of there properties are nothing special and mostly averaged.
Most of these are Hyatt Category 1 hotels. It'd be a big lost to the list for those who like redeeming nights for 5000 points.
I think there's a spelling mistake in your list of properties. After Charlotte Lake Airport, it should be spelled Mount Yanny.
Totally forget their were two hyatt places basically across the street from each other in north austin, glad the one i like is the one remaining a hyatt.
Been on a Bonus Journeys mattress run near Dulles Airport, especially the HP in Sterling. Both Sterling Dulles Airport North and Chantilly Dulles Airport South are among the cheapest Hyatt properties in northern Virginia on any given day, so it will be unfortunate to lose them as Hyatt mattress runs will definitely cost more in the future.