CHICAGO — Hyatt Hotels Corporation (NYSE: H), through one of its wholly owned subsidiaries, has signed an agreement to purchase a portfolio from LodgeWorks, L.P. and its private equity partners. The $802 million, all-cash deal includes 24 hotels and related assets under the Hotel Sierra, AVIA, Hyatt Place and Hyatt Summerfield Suites brands (*see breakdown below), and the agreement encompasses management, franchise and intellectual property rights.
The hotels being purchased are key assets in strategic, high barrier to entry markets, and the acquisition will enable the company to introduce Hyatt-branded hotels in nine markets where it currently is not represented at all, and to establish its extended stay presence in 16 new markets.
“This is a significant expansion of our presence in the United States and enhances our extended stay representation with a great collection of high quality hotels,” said Mark S. Hoplamazian, president and chief executive officer of Hyatt Hotels Corporation. “We know we must increase the number of markets we serve. This transaction is a noteworthy step in that direction, and will give us an immediate boost in brand awareness among both guests and potential third party developers.”
Following the transaction, 16 Hotel Sierra hotels will be branded as Hyatt Summerfield Suites, increasing the number of hotels in that portfolio from 38 to 54. Five properties, including the AVIA Hotels, are expected to be converted to full service Hyatt brands. The brand affiliations of Hyatt Summerfield Suites and Hyatt Place properties in the LodgeWorks portfolio will remain unchanged.
Industry veteran B. Anthony (Tony) Isaac, president of LodgeWorks, is expected to join Hyatt, as are other key members of the LodgeWorks management team.
“We have long admired Hyatt as an innovator and an operator,” said Isaac. “Given the company’s financial and brand strength and the depth of its commitment to becoming the preferred hospitality brand in each segment it serves, it’s an exciting time to join forces with the Hyatt team.”
According to its statement, Hyatt does not expect a significant benefit to 2011 full-year Adjusted EBITDA as result of this purchase, due to the expected timing of the closings, transaction costs, and the fact that several of the assets are continuing to ramp up post-opening. However, Hyatt expects this purchase to generate approximately $50 million of Adjusted EBITDA during 2012. The annual Adjusted EBITDA of this purchase is expected to grow in 2013 and beyond as the properties stabilize and the full benefit of the conversion and re-branding occurs.
* The hotels following hotels will join Hyatt Summerfield Suites (2,354 rooms):
- Bellevue, WA
- Branchburg, NJ
- Charlotte, NC
- Dulles/Sterling, VA
- Fishkill, NY
- Morrisville/Raleigh, NC
- Parsippany, NJ
- Rancho Cordova, CA
- Redmond, WA
- Richmond, VA
- San Jose, CA
- San Ramon, CA
- Santa Clara, CA
- Shelton, CT
- King of Prussia, PA
- Falls Church, VA
The following hotels will become Hyatt hotels (741 rooms):
- Green Bay, WI
- Long Beach, CA
- Napa, CA
- Savannah, GA
- Woodlands, TX
The following hotels are already Hyatt-branded (432 rooms):
- Hyatt Place Madison/Downtown (WI)
- Hyatt Summerfield Suites Boston/Burlington
- Hyatt Summerfield Suites Philadelphia/Plymouth Meeting
— Dan Marcec