Hyatt to receive Apple Leisure Group for $2.7B

Hyatt Accommodations Corporation has entered into a definitive agreement to acquire Apple Leisure Group (ALG), a luxury vacation resort-management solutions, journey and hospitality team, from affiliate marketers of KKR and KSL Money Partners LLC for $2.7 billion in dollars. The transaction is predicted to close in the fourth quarter, subject to customary closing conditions.

ALG’s vacation resort brand name administration platform AMResorts delivers management expert services to the largest portfolio of luxurious all-inclusive resorts in the Americas under the AMR Assortment model portfolio, which includes models this kind of as Secrets Resorts & Spa, Goals Resorts & Spas, Breathless Resorts & Spas and Zoëtry Wellness & Spa Resorts, as effectively as the fast-growing Alua Motels & Resorts brand, which is increasing in European leisure places. The acquisition also features ALG’s membership featuring, Endless Holiday vacation Club, journey distribution small business ALG Holidays, as well as desired destination administration solutions and travel technology belongings. Following the completion of the transaction, ALG’s enterprise will continue on to be led by present CEO Alejandro Reynal and the present management group. Reynal will grow to be a member of Hyatt’s government management group and report to Mark Hoplamazian, Hyatt president/CEO.

“With the asset-gentle acquisition of Apple Leisure Team, we are thrilled to bring a hugely attractive independent resort administration platform into the Hyatt family,” said Hoplamazian. “The addition of ALG’s properties will straight away double Hyatt’s international resorts footprint. ALG’s portfolio of luxurious manufacturers, management in the all-inclusive segment and massive pipeline of new resorts will lengthen our get to in present and new marketplaces, together with in Europe, and further accelerate our business-major internet rooms progress. Importantly, the combination of this value-producing acquisition and the $2 billion maximize in our asset sale commitment will change our earnings profile, and we assume Hyatt to access 80% price-centered earnings by the conclude of 2024.”

ALG’s hotel portfolio is composed of far more than 33,000 rooms running in 10 countries. The portfolio has grown from 9 resorts in 2007 to close to 100 homes by the stop of this 12 months and has a pipeline of 24 executed bargains with a substantial amount of more accommodations in the development procedure. ALG’s Endless Vacation Club is an exclusive travel club whose individuals take pleasure in favored fees and other benefits at AMR Selection homes. With extra than 110,000 customers, Limitless Vacation Club membership has grown at a compounded once-a-year development price of 18% about the last 5 several years.

“Combining Hyatt’s deep know-how and worldwide model footprint with ALG’s potent resort manufacturers, operating abilities and strong improvement strategies will elevate our differentiated place and make a leader in luxurious leisure vacation,” explained Reynal. “On behalf of anyone at ALG, I am grateful to our partners at KKR and KSL who supported us in setting up the platform into what it is currently. I am excited to have our workforce be a part of the Hyatt loved ones, and I anticipate a sturdy development journey in advance as the market expands and we are capable to present a very best-in-course leisure providing to an even larger team of tourists all over the entire world.”

“Today is a terrific milestone in what has been a tale of growth, resilience and devotion to environment-class leisure experiences by an excellent group at Apple Leisure Group,” explained Chris Harrington and Loaded Weissman, associates at KKR and KSL Capital Companions, respectively. “There is merely no better dwelling for ALG to keep on on its advancement trajectory than becoming section of Hyatt.”

Strategic rationale 

  • Expand footprint in luxury and resort travel: The acquisition will expand Hyatt’s presence in luxurious leisure journey and immediately add roughly 100 hotels and a pipeline of 24 executed deals in Europe and the Americas to its portfolio. Following completion of the transaction, Hyatt will offer the biggest portfolio of luxury all-inclusive resorts in the entire world, will double its global resort footprint,  will be the largest operator of luxurious hotels in Mexico and the Caribbean and will expand its European footprint by 60%. The acquisition will extend Hyatt’s brand footprint into 11 new European marketplaces, considerably enhancing Hyatt’s progress probable in Europe, a essential area for international development in leisure journey.
  • Expand platform for growth: ALG’s potent developer and owner foundation will broaden Hyatt’s associations with deeply fully commited associates in important complementary geographies. Hyatt’s global community of developers and its operational skills is envisioned to even more speed up progress of ALG makes. Hyatt plans to apply the combined toughness of the teams to broaden over and above ALG’s latest pipeline in new geographies in which ALG does not currently have lodges.
  • Gain homeowners: Access to ALG’s owned distribution platforms and its considerable practical experience in leisure vacation are anticipated to give significant alternatives for Hyatt’s existing resorts. Owners of AMR Collection homes will receive elevated entry to a a lot broader collection of brands, and the backing of Hyatt’s world wide distribution, income and marketing.
  • Enhance selection and activities for attendees: The merged resources of ALG and Hyatt will open up up expanded offerings and encounters for the benefit of the merged companies’ large-end guest and shopper foundation. Endless Getaway Club will carry extra than 110,000  travelers closer to Hyatt when touring for a variety of remain occasions apart from holidays. Following completion of the transaction, Hyatt will figure out means in which Entire world of Hyatt and Unlimited Vacation Club can convey added price and unique loyalty positive aspects to their member bases even though benefiting hotel owners.
  • Speed up asset-gentle strategy: The acquisition of ALG’s asset-gentle business enterprise will meaningfully increase the share of revenues and earnings Hyatt will deliver from service fees. Moreover, Hyatt anticipates fulfilling its current commitment to sell $1.5 billion of lodge true estate in 2021, resulting in a whole of more than  $3 billion of proceeds recognized since the asset-sale approach was announced in 2017 at a merged multiple of about 17x EBITDA as in comparison to Hyatt’s initial estimate of 13x to 15x. Hyatt is additional committing to an additional $2 billion in proceeds from the sale of hotel actual estate by the conclude of 2024.

Financing 
At closing, Hyatt expects to fund more than 80% of the obtain with a blend of $1 billion of funds on hand and new credit card debt financings, and the remainder with about $500 million from fairness funding. Hyatt has secured a $1.7 billion financing commitment from J.P. Morgan. Cash proceeds from the $2 billion asset sale system are anticipated to be utilized to pay out down personal debt, which include debt incurred to fund the acquisition. Hyatt is fully commited to maintaining an investment decision grade profile and to continue on running the equilibrium sheet prudently after the transaction.

Advisors 
In link with the transaction, BDT & Company LLC and J.P. Morgan served as financial advisors to Hyatt, and Latham & Watkins LLP acted as its legal advisor. PJT Partners served as economical advisor to ALG, and Simpson Thacher & Bartlett LLP acted as its legal advisor. Deutsche Bank Securities Inc. served as economic advisor to KKR and KSL Money Companions.

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