Hyatt to double global resort footprint with $2.7bn swoop for ALG

by | 20 Aug 2021 | All, Portfolio

Zoëtry Paraiso de la Bonita near Cancún

Hyatt Hotels Corporation has agreed to buy fellow hospitality giant Apple Leisure Group in a blockbuster deal that’ll double its global resort footprint and boost its development slate.

The eye-catching acquisition of Apple Leisure Group (ALG) is a striking statement of intent following the upheaval caused by Covid19.

ALG to change hands

Hyatt Hotels Corporation has entered into a definitive agreement to purchase vertically integrated travel and hospitality company ALG from KKR and KSL Capital Partners for US$2.7 billion in cash. Among the key ALG brands included in the deal are resort brand management platform AMResorts, travel distribution business ALG Vacations and guest loyalty programme Unlimited Vacation Club.

AMResorts provides management services to the biggest collection of luxury all-inclusive resorts throughout the Americas under the AMR Collection portfolio, encompassing the likes of Secrets Resorts & Spas, Dreams Resorts & Spas, Breathless Resorts & Spas and Zoëtry Wellness & Spa Resorts, as well as Alua Hotels & Resorts in Europe.

Retaining Reynal and his team

Following completion of the deal, which is expected to close in the fourth quarter of 2021, ALG’s business will continue to be led by current CEO Alejandro Reynal and his team. Reynal will also become a member of Hyatt’s executive leadership team and report to its president and CEO Mark Hoplamazian.

“With the asset-light acquisition of Apple Leisure Group, we are thrilled to bring a highly desirable independent resort management platform into the Hyatt family,” said Hoplamazian. “The addition of ALG’s properties will immediately double Hyatt’s global resorts footprint. 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, and further accelerate our industry-leading net rooms growth.”

“Combining Hyatt’s deep expertise and global brand footprint with ALG’s strong resort brands, operating capabilities and robust development plans will elevate our differentiated position and create a leader in luxury leisure travel,” added Reynal. “On behalf of everyone at ALG, I am grateful to our partners at KKR and KSL who supported us in building the platform into what it is today. I am excited to have our team join the Hyatt family and I anticipate a robust growth journey ahead as the industry expands and we are able to provide a best-in-class leisure offering to an even larger group of travellers around the world.”

ALG’s impressive global presence

ALG’s portfolio spans more than 33,000 hotel rooms across ten countries, with 100 properties by the end of 2021, and a pipeline of 24 executed deals across the Americas and Europe in the pipeline. The proposed transaction means that Hyatt will double its global resort footprint, becoming the largest operator of luxury hotels in Mexico and the Caribbean, and expanding its European footprint by 60%. It’ll also introduce the company to 11 new European markets. 

Hyatt expects to fund more than 80% of the purchase through a mix of $1 billion of cash on hand and new debt financings, and the remainder with $500 million from equity financing. The group has already secured a $1.7 billion financing commitment from JP Morgan.

Meanwhile, Hyatt reported that it’s on track to fulfil its current commitment to sell $1.5 billion of hotel real estate in 2021, and has now pledged to sell an additional $2 billion by the end of 2024. Proceeds from the $2 billion programme will be used to pay down debt, including debt incurred in funding the purchase of ALG.

BDT & Company and JP Morgan acted as financial advisors to Hyatt, with Latham & Watkins serving as legal advisor. PJT Partners worked as financial advisor to ALG, and Simpson Thacher & Bartlett acted as its legal advisor. Deutsche Bank Securities served as financial advisor to KKR and KSL Capital Partners.

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