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Hyatt Corp. Ready to Spend $175 million to Transform Many of the
 146 AmeriSuites into a Sleek, Tech-centric Hyatt Place
 Branded Mid Price Product

By Kathy Bergen, Chicago Tribune
Knight Ridder/Tribune Business News

Sep. 30, 2005 - SCOTTSDALE, Ariz. -- When luxury-oriented Global Hyatt Corp. marched into the middle market late last year with its purchase of the AmeriSuites chain, the Chicago-based hotel company promised to "Hyatt-ize" the properties.

And this week, under a broiling desert sun, the company unveiled just what that meant: A dramatic makeover aimed at the Generation X traveler on a budget.

Over the next 18 to 24 months, the Pritzker family's hotel chain will spend $175 million to transform most of the 146 AmeriSuites into sleek-but-homey, tech-centric Hyatt Place products.

"The Gen-X family is where the growth is at," Jim Abrahamson, the company's point man on the Hyatt Place project, said Wednesday in Scottsdale, where two prototype rooms were shown.

Hyatt joins the growing ranks of challengers who are trying to redefine the mid-price market now dominated by Courtyard by Marriott and Hilton Garden Inn.

Starwood Hotels & Resorts Worldwide Inc., for instance, is launching a new brand, "Aloft," as a budget-minded alternative to its stylish W Hotels. And Intercontinental last year introduced a boutique brand, Indigo, to target the youthful market.

"Gen-X travelers are younger and earning less, but they are traveling more per capita and spending more per trip than Baby Boomers," Bjorn Hanson, a consultant with PricewaterhouseCoopers, said.

The Hyatt Place prototypes feature raised pillow-top beds with cantilevered ledges jutting from the oversized wooden headboards. The wet bar and vanity are built with black granite and wood, and the sitting room was redesigned as a cozy corner, with an L-shaped sectional sofabed and an oversized ottoman in solid, neutral colors, accented by bright pillows in aqua and reds. Curtains are sheer.

The desk in the work area includes a "power bar," where customers can plug in laptops, MP3 players or video games, and have them played on a 42-inch high-definition TV or a 21-inch flat screen. Wireless connectivity is available throughout the hotel, and fresh coffee and hot food is available at all hours.

Generation X "wants personal control," Abrahamson said. "They want to drink diet soda for breakfast, or [have] cereal for dinner. They want to listen to their own music."

Retrofitting AmeriSuites is expected to cost $18,000 to $20,000 per guestroom, compared to a typical renovation cost of $6,000 to $10,000.

This investment "is an indication that this will be a new and important repositioning of those hotels," Hanson said.

"Almost overnight they will get a stronger image, and almost immediately they should be able to get a bump in prices," said Ted Mandigo, a hotel consultant based in Elmhurst.

The AmeriSuites chain's daily rates average $75 to $85, and Hyatt Place should be able to average $110 to $115, Abrahamson said. Occupancy rates should climb to the low to mid-70 percent range, from the current upper-60 percent range.

Hyatt intends to expand the AmeriSuites brand in the U.S. and overseas by partnering with franchise companies. This would be the firm's first significant move into franchising and would add a new revenue stream.

Hyatt has been considering going public, and the growth of a new brand would help make the company more attractive to Wall Street, observers said.

"One reason companies have been successful in public offerings is the market expectation of growth," said Hanson. "Hyatt has been successful growing the traditional Hyatt brand, and this adds another dimension."


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