Hyatt Expands Portfolio with the Addition of Two Roads
Big hotel name Hyatt will see its stock grow as its plans to add Two Roads to its portfolio of brands. We find out more about how Hyatt plans to develop the brand under its umbrella.
Hyatt to expand portfolio
Hyatt is the latest big brand to grow its portfolio by buying a smaller hotel group which will significantly increase its stock of properties. The acquisition of lifestyle hotel management company Two Roads will bolster Hyatt’s collection of hotels and brands in an already competitive market, where larger groups such as Marriott and Hilton have been sweeping up companies at a rate of knots in an effort to make them the biggest and best. It was only a matter of time before Hyatt made a play for a large acquisition, and the Two Roads deal seems to be their choice for a new, big-hitting company.
The road to growth with Two Roads
Hyatt’s closure on the Two Roads acquisition will close in a matter of weeks. For $480m, financed by the sale of real estate assets over the past two years, Hyatt will now be at the helm of an additional 14,000 guest rooms and 17,000 employees, and their total property count will now number over 800. The purchase of the Two Roads’ collection of properties will also bring Hyatt close to having 20 brands in their arsenal, and lead them into 20 new markets.
Two Roads projections
By 2020, Hyatt anticipates that Two Roads will have brought them an implied multiple of between 12 and 13 times gross adjusted earnings. Smaller, independent hotels that form part of the Two Roads collection will benefit from Hyatt’s World of Hyatt loyalty program, and the management agreements will be handled with an additional $120m investment should the hotel group need to assuage any concerns on the part of small hotel owners who may not want to be assimilated into the Hyatt group. It is hoped that these owners will see the opportunities presented to them by being part of Hyatt, and CFO explained, “Regarding Hyatt’s appetite for future brand acquisitions, that remains something that we are focusing on. We’re very excited about the acquisition opportunity with Two Roads and there’ll be tremendous focus on the successful integration over the next several months here. But the company continues to look at other opportunities like Two Roads that would involve the integration of brands that are complementary to our existing portfolio while bringing in a new management fee platform.” For more information, click here.
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