Hyatt is hoping to take advantage of its strong cash position to acquire assets, including possibly a brand.
The group, which had a successful $950m (£607m) flotation in November last year, has $1.6bn in available cash and cash equivalents on its balance sheet, which investors hope will be used to buy hotels.
The company owns a higher proportion of its properties than many of its asset-light competitors, and is the largest owner in its system, owning over 100 hotels, plus joint ventures, out of its portfolio of 445 hotels.
In a conference call for the group's second-quarter earnings, president and CEO Mark Hoplamazian said: "There's a significant number of places in which we have an opportunity to actually use the capital to really have a meaningful impact on our expansion of presence.
"We have a number of markets into which we are looking to expand, we don't have a fixed budget in mind – it's relevant to the balance sheet capacity that we already have. We're trying to be responsive to what people need so we've done key money deals and structured investments. We have to be responsive and creative.
"The number of opportunities that involved more structured deals seems to be more common and represents more of the opportunities that we're now investigating. There is no cookie cutter approach."
Hoplamazian said that the company was looking to build earnings through growth from existing hotels "and we will expand in markets in which we are not represented or are underrepresented".
He added that Hyatt would look to debt and equity deals, joint ventures and providing loans to build its profile and target key markets. He said he expected to see transactions in hotel market to start to rise in late 2010 and early 2011, commenting: "We are firm believers in the recycling of capital."
The group's involvement in the re-opening the Hyatt Regency New Orleans – the city's biggest hotel, next to the Superdome – which has been closed since Hurricane Katrina, was highlighted by Hoplamazian.
He said: "In our New Orleans hotel we provided a $60m preferred equity stake. This transaction is an example of how we can use out capital to meet the needs of owners and developers in order to expand our presence in markets that are important to our customers. It's something that we're looking at in a number of other cases and we expect to step up our activity on that basis.
"We have stepped up our level of activity in that way, more than we had a quarter ago. Over time, I believe that there will be a further increase in activity and opportunities at the latter half of this year and then into 2011, as owners and lenders evaluate what their opportunities are."
The group is also planning to expand its franchising business, with a focus on full service, which Hoplamazian described as a "relatively new avenue of growth for us".
Hyatt opened 12 hotels during the quarter, all of which were managed or franchised, with 10 franchised and nine under the group's select service brands.
Since the end of the quarter the group opened the Andaz in New York and has announced the development of first Hyatt in Latin America and signed four management agreements under the brand, bringing to 11 the number open or in development in the three years since its launch.
CFO Harmit Singh said: "The other area of growth is the select service – construction financing on the select side has completely evaporated, but the strength of the portfolio's performance means that we are taking a hard look at that."
The group has increased its number of anticipated openings this year from "more than 20" to 25 hotels. It added that, in Europe, it was predominantly looking at expansion through management contracts.
The group is also planning to sell 11 hotels in the US under the Hyatt and Hyatt Regency brands in suburban markets or in smaller cities and are in the Midwest and the West Coast. Hoplamazian said: "We have a significant investment in owned hotels and we want to increase the velocity of that capital and use it to make new investments. We expect to be active on both the buying and selling side of the equation throughout the cycle."
The company reported net income of $25m for the second quarter, against a loss of $50m in the same period last year, as it saw signs of demand improvement in North America's group and transient business.
Quarterly revenue rose 5.2% to $889m, with revpar up by 9.6%, driven by occupancy as rate was down across the portfolio, with the exception of the group's international managed and franchised estate, which saw rate growth of 2.3% and revpar up 21.4%. Adjusted Ebitda grew by 12.5% to $135m.
Hyatt said that second quarter occupancy levels had increased at the majority of its hotels with the rate rises it had started to see in the first quarter continuing into the second. Internationally around 45% of hotels saw rate increase in the quarter, against 35% in the previous quarter.
The company said that it had seen strengthening group business and expected to see higher corporate rates coming out of negotiations in the autumn.
The group continued to be cautious and said that it had yet to see the group booking window lengthen. Hoplamazian said: "Overall, while we were pleased with our performance in the quarter we are still well below the business level seen in our profit peak two years ago."
HA Perspective: Hotel brand and operating companies are increasingly willing to put their hands in their pockets to provide key money or sliver equity to win contracts. Hyatt is merely confirming publicly what any developer already knows.
But there is both a limit and a price for this largesse. Owners of sites in primary locations are likely to find all sorts of inducements offered but in a less desirable location or with a less desirable property, the management companies are unlikely to be so generous.
Wily owners should focus on extracting better terms in their management contracts unless they are desperately in need of some financial help.
And if they are in need of financial help and they are sitting on a plum location, they should be thinking about changing their debt financier instead. What matters for the long-term health of a deal is picking the right brand on the right terms, not the short-term carrots.