Wednesday, June 29, 2022

Hyatt Hotels expands leisure footprint with $2.7bn investment

Hyatt Hotels is expanding its luxury hotels and resorts by acquiring Apple Leisure Group (ALG) from KKR and KSL Capital Partners at an investment of $2.7 billion in cash. 

The company is committing to develop its leisure travel, which has pushed its revenues over the 50 per cent mark, from 45 per cent, with business travel making up the rest of its revenues. The acquisition of the leisure travel and resort brand management company would add roughly 33,000 rooms across 100 hotels to Hyatt’s portfolio.

ALG’s resort brand management platform AMResorts provides management services to resorts in the Americas under the AMR TM Collection brand portfolio. The acquisition also includes ALG’s membership offering, Unlimited Vacation Club, travel distribution business ALG Vacations, as well as destination management services and travel technology assets. The ALG portfolio consists of over 33,000 rooms operating in 10 countries. The portfolio has grown from nine resorts in 2007 to approximately 100 properties by the end of 2021 and has a pipeline of 24 executed deals with a large number of additional hotels in the development process.

The $2.7 billion cash deal is expected to close in the fourth quarter of 2021 and will expand the Hyatt’s European presence by 60 per cent.

ALG’s business will continue to be led by current ALG CEO Alejandro Reynal, who will become a member of Hyatt’s executive leadership team and report to Hyatt CEO Mark Hoplamazian.

Hoplamazian said: “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. 

Leisure have traditionally been the first market segment to recover subsequent to market downturns in the last 20 years.

“We’re very bullish on leisure travel, it’s proven its resiliency and durability,” said Hoplamazian in a report on Forbes. “Leisure travel has recovered more quickly than business travel. We’re excited about luxury in particular because we expect the global luxury travel market to grow at about 11 per cent from 2021 to 2027.”

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