Hyatt Buying Apple Leisure Group For $2.7B
Hyatt Hotels Corp. has struck a deal to acquire Apple Leisure Group for $2.7B in cash from Kohlberg Kravis Roberts & Co. and KSL Capital Partners. ALG's management portfolio spans over 100 resort properties, including over 33,000 rooms in 10 countries.
ALG specializes in selling package holidays and manages resorts in the Caribbean, Mexico, Europe and other places. Resort brands that the company manages include Alua Hotels & Resorts, Breathless Resorts & Spas, Dreams Resorts & Spas, Secrets Resorts & Spas and Sunscape Resorts & Spas, and ALG also has a number of subsidiaries, such as Apple Vacations, CheapCaribbean.com and Southwest Vacations.
The deal is a large bet on the post-pandemic health of the resort market for Hyatt, whose market capitalization is $7.3B. Shares in Hyatt dropped slightly on Monday morning after the deal was announced, but on the whole, the hotel giant has seen some recovery since the pandemic summer of 2020. A year ago, Hyatt shares were trading for nearly $55; as of Monday morning, they were about $72 per share.
“The addition of ALG’s properties will immediately double Hyatt’s global resorts footprint," Hyatt CEO Mark Hoplamazian said in a statement. "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."
Entry into European markets seems to be a key consideration in the deal, since it will expand Hyatt's footprint in that part of the world by about 60%, according to travel news specialist One Mile At A Time. Acquiring ALG will provide entry for Hyatt into 11 new European markets. It will also expand Hyatt's presence in the Caribbean and Mexico.
ALG grew rapidly in the pre-pandemic years of the 2000s and 2010s. In 2007, the company managed nine resorts, rising to more than 100, with deals made to manage 24 more starting in the near future.
Hyatt plans to fund more than 80% of the acquisition with $1B in cash on hand and new debt financings, and the rest with about $500M in equity financing. Hyatt has secured $1.7B in financing from J.P. Morgan.
Hyatt isn't the only hotelier to pursue a strategy of acquiring asset-light operations. Hilton has been on the track for some time, most recently inking a deal to manage three all-inclusive properties in Mexico, including Hilton Vallarta Riviera All-Inclusive Resort, Hilton Tulum All-Inclusive Resort and Conrad Tulum.
