Hyatt acquires resort operator Apple Leisure Group for US$2.7 billion

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Tourism and leisure industry dynamics

American hotel group Hyatt has agreed to acquire the private equity-invested resort operator Apple Leisure Group for US$2.7 billion to expand its influence in the rapidly recovering leisure travel market.

Apple Leisure, owner of Zoetry and the Sunscape resort brand, will enable Hyatt to significantly increase its share of the luxury resort market, which has proven to be one of the most resilient during the pandemic, as customers are eager to book after a long lock-in Holiday.

Hyatt said it will fund the acquisition through cash and debt financing. It will also add $2 billion worth of assets to the existing hotel real estate sales plan to repay debt.

Hyatt’s goal is that by 2024, 80% of its revenue will come from management fees, rather than owning and leasing hotels.

The transaction valued asset-light operator Apple Leisure​​of $2.7 billion, including debt.

Hyatt Chief Executive Mark Hoplamazian said on Sunday that the transaction was “effective immediately” and would double the number of Hyatt resorts worldwide, but Apple Leisure has completed another 24 new resort transactions , And 40 items are under negotiation.

“The truth is that leisure travel has proven to be very durable and will continue in terms of demand. I think the all-inclusive approach is very attractive to many customers,” he said.

This transaction is the latest move by major hotel chains to expand their involvement in the luxury leisure travel sector, which has rebounded rapidly with the relaxation of international travel restrictions.InterContinental Hotels Group announced plans to launch on Tuesday Luxury resort brand In the next three weeks, Marriott, the world’s largest hotel group, also expressed its desire to increase its all-inclusive resort products.

Accor, Europe’s largest hotel group, split its high-end leisure assets into A joint venture Last year, it cooperated with Ennismore, the operator of the Hoxton hotel chain.

Apple Leisure Group is currently owned by U.S. private equity group KKR and travel expert KSL. It operates approximately 100 all-inclusive luxury resorts and is one of the largest tour operators, offering travel packages from the United States to Mexico and the Caribbean. Run Unlimited Vacation Club, a subscription plan that offers discounts and benefits to travelers.

The acquisition will add approximately 28,500 employees to Hyatt, and Hyatt was forced to lay off a quarter of its staff during the pandemic.

Hoplamazian said that Apple Leisure’s customer demographics are similar to Hyatt, and its core strategy is to target wealthier travelers. He added that the deal will “expand and expand the different ways we take care of these travelers.”

The Hyatt veteran stated that although other competitors have entered the luxury leisure market, “they have not expanded significantly” and Apple Leisure will “provide a resource base and a foundation of expertise for Hyatt. [the company] Over time, we are in a very advantageous position to develop this platform more actively and successfully.”

The acquisition of Apple Leisure will also enable Hyatt to expand its European hotel portfolio by 60%.

Chris Harrington and Rich Weissman, partners at KKR and KSL Capital Partners, said: “For ALG, there is no home that can continue its growth trajectory more than being part of Hyatt.”

Apple Leisure’s management team is led by CEO Alejandro Reynal (Alejandro Reynal) and will continue to operate the company under the Hyatt umbrella.

Hyatt is advised by BDT & Company, JPMorgan Chase and Latham & Watkins. KKR and KSl were advised by the law firms of PJT Partners and Simpson Thacher & Bartlett.

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