Hyatt to Acquire Apple Leisure Group for $2.7B

Hyatt Hotels Corp. has entered into a definitive agreement to acquire Apple Leisure Group, a luxury resort-management services, travel and hospitality group, from KKR and KSL Capital Partners, LLC affiliates for $2.7 billion in cash.

ALG’s hotel portfolio includes over 33,000 rooms operating in 10 countries. It has grown from nine resorts in 2007 to approximately 100 properties by the end of 2021. In addition, it has a pipeline of 24 executed deals with a large number of additional hotels in the development process

Mark Hoplamazian, president and chief executive officer of Hyatt, said that the addition of ALG’s properties would immediately double Hyatt’s global resorts footprint and help the company reach 80% fee-based earnings by the end of 2024.

“ALG’s portfolio of luxury brands, leadership in the all-inclusive segment and large pipeline of new resorts will extend our reach in existing and new markets, including in Europe, and further accelerate our industry-leading net rooms growth,” he said in a prepared statement.

After completing the transaction in the fourth quarter, ALG’s business will continue to be led by current ALG CEO Alejandro Reynal and the current ALG leadership team. Reynal will become a member of Hyatt’s executive leadership team and report to Hyatt CEO Mark Hoplamazian.

LG’s resort brand management platform AMResorts provides management services to all-inclusive resorts under the AMRTM Collection brand portfolio. It includes brands, such as Secrets Resorts & Spa, Dreams Resorts & Spas, Breathless Resorts & Spas, Zoëtry Wellness & Spa Resorts and the fast-growing Alua Hotels & Resorts brand. Hyatt says that the acquisition also includes ALG’s membership offering, Unlimited Vacation Club, travel distribution business ALG Vacations and destination management services and travel technology assets.

For Hyatt, the benefits of the deal include an expanded footprint in luxury and resorts, an expanded platform for growth in new geographies, increased access to a much broader collection of brands for owners (and the backing of Hyatt’s global distribution, sales and marketing), increased choice and experiences for guests and acceleration of its asset-light strategy.

The acquisition of ALG’s asset-light business will meaningfully increase the percentage of revenues and earnings Hyatt will generate from fees. In addition, Hyatt plans to sell $1.5 billion of hotel real estate in 2021.

Hyatt is completing the acquisition amid pent-up demand for travel, even with the rise of the Delta variant.

Keith Barr, CEO of IHG Hotels and Resorts, says there are unprecedented levels of demand and pricing power for hotels right now.

“Consumers want to travel,” Barr said on CBRE’s “The Weekly Take” podcast. “And everyone asked me about the recovery. It’s a direct correlation to vaccines and government restrictions and travel orders. And so as those lift, travel will come back.”