Rooms With a View : Chance Encounter Led to Creation of Rapidly Expanding Hyatt Hotels Chain
Entrepreneur Jay Pritzker had some extra time on his hands one August morning 30 years ago, so he bought a 149-room motel next to the Los Angeles airport. And from that serendipitous event, the Hyatt chain of hotels was born.
Now Hyatt, still using the name of that first motel, is expanding at its most aggressive rate ever--and the Chicago chain is turning back to California for growth opportunities.
For starters, Hyatt has opened a development office in Newport Beach, the only one outside Chicago. In addition, the company recently bought two hotels in Southern California, is building three others and has three California resorts in the works.
But the Hyatt empire--made up of separate domestic and international companies with 132 hotels and resorts between them--was not even a dream when Jay Pritzker stepped off an early-morning flight from Chicago on his way to a business meeting one day in early August, 1957.
Across Century Boulevard from the old Los Angeles International Airport terminal, Pritzker saw the arches of the Hyatt House, a 4-year-old motel owned by local man-about-town Hyatt R. von Dehn.
Pritzker was then a 34-year-old scion of one of the nation’s wealthiest families with a wide range of business holdings, and he was not particularly interested in buying a hotel. But at dinner in Chicago the night before, he had been told that Von Dehn, well known in Los Angeles society partly for his many high-profile marriages and divorces (among them a marriage to Walter Winchell’s daughter, Walda, and another to radio singer Ginny Simms), was looking to sell.
“It was too early to do anything and too late to go back to bed,” Pritzker recalled of his arrival that morning in Los Angeles. So he headed for the motel’s coffee shop. “I remember the cook could break four eggs without breaking the yolks--that was the most distinctive thing about the cuisine.”
Pritzker was intrigued by the location and quick calls to business associates turned into a breakfast meeting a couple of hours later at Von Dehn’s unusual Bel-Air home, described in a Los Angeles Times gossip column as “Nordic modern,” with a dining room table that could be hydraulically lowered to coffee-table height.
Von Dehn “was a character” who became “a little difficult” at the 8 a.m. breakfast, Pritzker said. Pritzker, who has a law degree, wrote out a proposal and left.
A few days later, his $2.1-million offer was accepted and the Pritzker family began operating the hotel on Sept. 24.
Original Hotel Moved Twice
“I would love to tell you that all of this was pursuant to an original plan and was carefully planned out, but it ain’t so,” Pritzker said. “The truth is I bought that one (in Los Angeles) because it seemed to be a good deal. Each one was a fluke.”
That original Hyatt House at 5547 W. Century Blvd. is now called the Airport Century Inn, under different ownership. The airport Hyatt has moved twice since those days and the current Hyatt Los Angeles Airport sits at 6255 W. Century Blvd.
Von Dehn soon invited the Pritzkers to join in building another airport hotel in Burlingame, near San Francisco, which the Pritzkers took over. A third airport hotel followed in Seattle and a fourth was built in Chicago.
“And so we had a little chain going of airport hotels,” Pritzker said, noting that quality hotels near airports were not the norm. “I had never seen a first-rate hotel at an airport before.”
The Pritzkers decided that it was time to get serious about the hotel business. Under the direction of Jay’s younger brother, Donald, the chain grew quickly, primarily in the West. (Donald Pritzker died in 1972 at the age of 39).
A turning point came in 1967 when Hyatt was invited to finance an unfinished hotel in Atlanta that had been turned down by nearly every major hotel chain. The Atlanta hotel, designed by architect John Portman, featured the novelty of an atrium lobby.
Conrad Hilton reportedly dubbed the hotel a “concrete monster” that would never be successful.
But the Hyatt Regency Atlanta opened to much acclaim and the atrium has become a Hyatt signature. The growing chain went public in 1968.
Today, Hyatt Hotels Corp. and Hyatt International are private companies owned by trusts for the Pritzker family. The companies build and manage four types of hotels: downtown convention hotels; small urban and suburban hotels with 200 to 300 rooms; small, upscale hotels called Park Hyatts, and resorts, which also attract convention business.
Despite overbuilding in the hotel industry, Hyatt is expanding aggressively, said Hyatt Hotels President Darryl Hartley-Leonard. Overbuilding has, in fact, made the expansion possible because many distressed properties have become available for purchase, he said.
“We will operate more new hotels next year than ever in the history of the company,” said Hartley-Leonard, a native of England who joined Hyatt 24 years ago as a front desk clerk at the Hyatt City of Commerce.
“There’s no question it’s a far more competitive environment that it has been, but opportunities still remain and we try to exploit those opportunities,” Pritzker said. “You have to be very active or you will fall by the wayside.”
The opportunities Hyatt is pursuing lie primarily in resort properties and smaller suburban hotels, Hartley-Leonard said. Hyatt Hotels is particularly interested in the Caribbean and in California, while Hyatt International is expanding rapidly in Australia, Asia and Latin America.
In California, Hyatt recently took over the Garden Grove Alicante Princess and the Westlake Plaza in Westlake Village, and has started managing the Grand Champions resort in Indian Wells. The company is building hotels in Sacramento, San Francisco and Burlingame and is thinking of a property in Monterey.
Hyatt has been working for five years to get approval for a resort in Santa Barbara and is considering building resorts in Palm Springs and Laguna Beach area.
“The garden state for us is California,” Hartley-Leonard said. “For a number of years we’ve done all our expanding in the East and Midwest and now we’re coming back to California.”
One of Hyatt Hotels’ most spectacular projects is the Hyatt Regency Waikoloa in Kona, Hawaii, which is scheduled to open next September. With 1,250 rooms, 2,000 employees, a one-acre swimming pool, an intricate system of gondolas and monorails to move guests around the 60-acre resort and a $360-million price tag, it will be the largest and most expensive hotel ever built in the United States.
“There’s going to be nothing like it in the world,” Pritzker said.
“The thing about our resorts is that we are in the entertainment business,” Hartley-Leonard said. “We are in the fantasy business.”
The business last year brought Hyatt Hotels $1.6 billion in revenues and Hyatt International $185 million. “We don’t disclose profit,” Hartley-Leonard said, “however the fact that we say profit indicates that we’re making money.”
Pritzker doesn’t find it strange that another man’s name hangs on the chain his family built.
“It’s as good a name as any,” he said. “I don’t think you want to use the name Pritzker--nobody can say it or spell it.”
