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🏨 Hyatt Hotels: A For Apple; L for Leisure?
US-based hotel operator Hyatt Hotels Corp (H) has signed a deal to buy Apple Leisure Group from its private equity owners for $2.7B in cash. The deal will instantaneously expand Hyatt's European presence by 60%. Hyatt is betting on Covid-weary leisure travellers to Europe to bring in the revenue.
Becoming The Big Fish
Apple Leisure Group was acquired by private equity owners KKR & Co. and KSL Capital Partners in 2017 for an undisclosed sum. The following year, Hyatt acquired Two Roads Hospitality for ~$400M. After a 3-year hiatus, Hyatt is adding Apple Leisure to its portfolio for $2.7B.
From 9 resorts in 2007, Apple Leisure’s portfolio grew to 100 properties this year with over 33K rooms across 10 countries. 24 other deals are in the pipeline, with several hotels being currently developed.
The acquisition will see Hyatt:
Doubling its global resort footprint;
Having the largest portfolio of luxury all-inclusive resorts in the world;
Becoming the largest operator of luxury hotels in Mexico and the Caribbean; and,
Expanding its European footprint by 60%.
In addition to this, Hyatt will also foray into 11 new European markets courtesy of ALG's properties.
Hyatt expects the Apple Leisure acquisition to close by the end of the year. The company is also committed to selling real estate worth $3.5B by 2024 as it shifts to a fee-driven business model. It expects Apple Leisure’s asset-light business to propel it further in this direction.
The plans are in place. Now Hyatt just needs people to show up at its resorts! As the pace of vaccinations rises and countries begin to open their borders, the expectation is for people to spend that extra buck for personal safety instead of going for budget hotels.
Hyatt’s shares are yet to turn positive for the year. The company and its shareholders are fervently hoping this deal has everything that’ll push travellers to check into its hotels and light the fire of optimism in its languishing stock price.
Market Reaction
H ended at $70.41, down 1.39%.
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