Hyatt announced on Sunday that it has entered into a definitive agreement to acquire Apple Leisure Group (ALG), a leading luxury resort-management service, travel and hospitality group from affiliates of KKR and KSL Capital Partners, LLC for $2.7 billion in cash. The deal is set to close in the fourth quarter of 2021. The group anticipates the growth of the luxury leisure travel market, despite the pandemic.
Hyatt Hotels Corporation, headquartered in Chicago, currently has 20 premier brands under its belt. As of June 30, 2021, their portfolio includes more than 1,000 hotel and all-inclusive properties in 68 countries across six continents. An acquisition of ALG will double Hyatt’s global resorts footprint and will add about 33,000 rooms and 100 properties in 10 countries.
ALG’s resort brand management platform AMResorts® provides management services to the largest portfolio of luxury all-inclusive resorts in the Americas under the AMR™ Collection brand. Well-known brands Secrets, Dreams, Breathless and Zoëtry Resorts as well as the fast-growing Alua Hotels & Resorts, which is expanding in Europe, are part of their assets. The acquisition also includes ALG’s membership offering, Unlimited Vacation Club®, travel distribution business ALG Vacations®, as well as destination management services and travel technology assets. With over 110,000 members, Unlimited Vacation Club® membership has grown at a compounded annual growth rate of 18% over the last five years.
Hyatt’s CEO and President, Mark Hoplamazian says the move will expand the company’s reach in Europe by an estimated 60%, as they will be entering 11 new European markets. “The combination of this value-creating acquisition and the $2 billion increase in our asset sale commitment will transform our earnings profile, and we expect Hyatt to reach 80% fee-based earnings by the end of 2024,” says Hoplamazian.
Hyatt expects to fund more than 80% of the purchase with a combination of $1 billion of cash on hand and new debt financings. The remainder will be paid with about $500 million from equity financing. The hotel group has also secured a $1.7 billion financing commitment from JP Morgan. Hyatt is further committing to an additional $2 billion in proceeds from the sale of hotel real estate by the end of 2024, cash proceeds from which are expected to be used to pay down debt.
Following completion of the transaction, Hyatt will offer the largest portfolio of luxury all-inclusive resorts in the world. They will also be the largest operator of luxury hotels in Mexico and the Caribbean.