Worldwide: Hyatt Hotels Corporation has agreed to buy luxury hotel and resort operator Apple Leisure Group for $2.7 billion in cash, expected to close Q4 2021.
The acquisition will expand Hyatt’s presence in the luxury leisure market by adding approximately 100 hotels and a pipeline of 24 executed deals in Europe and the Americas to its portfolio. As a result, Hyatt will offer the largest portfolio of all-inclusive resorts globally, doubling its current size.
Apple Leisure Group will remain under the leadership of CEO Alejandro Reynal, who will join Hyatt’s executive leadership team and report to Mark Hoplamazian, the company’s president and CEO.
The business will be acquired from KKR and KSL Capital Partners. Hyatt expects to finance the transaction using cash reserves of US$1 billion as well as new debt financings. Equity financing of US$500 million will support the remainder of the purchase.
Forming part of Hyatt’s asset-light strategy, the deal will increase the percentage of revenues and earnings Hyatt will generate from fees. Additionally, the chain expects to sell $1.5 billion of hotel real estate in 2021, with a further $2 billion in proceeds from hotel sales by the end of 2024.
Speaking to CNBC, Hoplamazian said: “Leisure was the first segment to return and recover subsequent to most of the downturns in the last 20 years. We obviously have seen a robust recovery in this one. It’s not a change in strategy, it’s a recognition that leisure is durable and has been resilient. We are not underwriting this transaction on what happens in the next four weeks or four months, but rather on what happens farther in the future. We think this is going to be a growing segment.”
Reynal said: “Hyatt’s deep expertise and global brand footprint with Apple Leisure’s strong resort brands, operating capabilities and robust development plans will elevate our differentiated position and create a leader in luxury leisure travel. On behalf of everyone at ALG, I am grateful to our partners at KKR and KSL who supported us in building the platform into what it is today. I am excited to have our team join the Hyatt family and I anticipate a robust growth journey ahead as the industry expands and we are able to provide a best-in-class leisure offering to an even larger group of travellers around the world.”
“Today is a great milestone in what has been a story of growth, resilience, and dedication to world-class leisure experiences by an outstanding team at Apple Leisure Group,” said Chris Harrington and Rich Weissman, partners at KKR and KSL Capital Partners, respectively. “There is simply no better home for ALG to continue on its growth trajectory than being part of Hyatt.”
Latham & Watkins and Simpson Thacher & Bartlett acted as legal counsel to Hyatt and Apple Leisure respectively.
