Hyatt acquires Two Roads Hospitality in $480 million deal
Alila Jabal Akhdar hotel in Oman
Two Roads is an international lifestyle hotel management company with a unique collection of distinctive brands, properties and development assets
Hyatt Hotels Corporation has announced its intent to acquire Two Roads Hospitality for a base price of $480 million. Two Roads Hospitality, for those who are unfamiliar, is an international lifestyle hotel management company with a unique collection of distinctive brands, properties and a robust development pipeline around the globe.
Two Roads Hospitality’s boutique and lifestyle brands include Alila Hotels & Resorts, Destination Hotels, Joie de Vivre Hotels / JDV Collection, Thompson Hotels, and tommie. The company is a young one in the market, first formed in September 2016 after Destination Hotels and Resorts merged with Commune Hotels + Resorts. This is a significant deal for Hyatt, seeing as the addition of Two Roads to the Hyatt portfolio will add 85 properties to Hyatt’s existing portfolio of 750 hotels, thereby expanding Hyatt’s footprint into 23 new markets. Most importantly, perhaps, is that Two Roads acquisition especially broadens Hyatt’s footprint within the increasingly important Asia Pacific market.
What Stakeholders Are Saying
Hyatt was, predictably, excited to talk up its latest acquisition.
“Hyatt and Two Roads share a commitment to genuine care and delivering distinctive experiences to discerning travelers. We are pleased to be coming together, and are dedicated to learning from each other and taking the best of both organizations forward,” said Mark Hoplamazian, president and chief executive officer, Hyatt Hotels Corporation. “Two Roads’ passionate team members, strong brands, global footprint and robust development pipeline will expand our lifestyle offerings and grow Hyatt’s brand presence in more places where our guests and World of Hyatt members want to travel. Importantly, combining Two Roads’ meaningful brand presence and development plans in Asia with Hyatt’s already strong position in this region will allow us to accelerate expansion in this critically important and fast-growing part of the world.”
More About the Transaction
The acquisition consists of a base purchase price of $480 million, with the potential for Hyatt to invest up to an additional $120 million in the aggregate, contingent on the outcome of certain terms to be individually defined after closing. The base plus contingent total purchase price is expected to reflect an EBITDA multiple of approximately 12-13x stabilized 2021 earnings, which Hyatt considers the best indicator of valuation based on anticipated synergies and growth.
Consistent with Hyatt’s long-term growth strategy to drive shareholder value, this investment in a high-growth, capital-light platform accelerates Hyatt’s evolution to a more fee-driven enterprise, funded by proceeds from an asset disposition program in which real estate has been monetized at an average multiple of approximately 16.5x EBITDA to date. Notably, Hyatt is making this growth investment in a year in which it has committed to return approximately $800 million of shareholder capital through a combination of share repurchases and a cash dividend.
The transaction is expected to close later this year, after which Hyatt will create a dedicated lifestyle division that will serve as a catalyst to unite the operations of Two Roads and of Hyatt’s lifestyle brand.
Let’s take a look at a few projects currently underway by Two Roads Hospitality:
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