Diversification from a traditional business model can have its pitfalls, as Hyatt learned recently: The hotel giant has had to take a huge impairment charge related to its investment in Oasis, a homesharing platform the group bought into last year.

We find out more.

Oasis posing problems

It might have seemed like a savvy move for Hyatt Hotels to branch out and get its finger in the homesharing pie. Its peers in the hospitality industry have been doing the same, but it hasn’t proved to be quite the success that Accor or Hyatt were hoping for.

Last year, Hyatt made a large investment into luxury homesharing platform Oasis, but the group said at the beginning of August that it had had to take a $22m impairment charge for the Oasis deal.

Hyatt chief financial officer Pat Grismer said, “That impairment relates to Oasis, which is the alternative accommodations investment that we made last year. Oasis has underperformed our expectations as it relates to the scalability of that business and the synergies to be realized through the alliance with Hyatt. The business has consistently experienced shortfalls in operating cash flow and so, as a consequence, we felt that it was prudent to impair our investment to date.”

Impairment is an accounting principle that describes a permanent reduction in the value of a company's asset, normally a fixed asset. When testing for impairment, the total profit, cash flow, or other benefit that's expected to be generated by a specific asset is periodically compared with that same asset's book value.

Sorcha O'Higgins - TOPHOTELNEWS editor / Original article