REBusinessOnline

Hyatt Agrees to Acquire Hospitality Operator Apple Leisure Group for $2.7B

Mark-Hoplamazian-Hyatt

CHICAGO — Hyatt Hotels Corp. (NYSE: H) has agreed to acquire Apple Leisure Group (ALG), a Pennsylvania-based firm that specializes in third-party operations of luxury wellness resorts, for $2.7 billion.

The transaction comes as part of the Chicago-based hotel giant’s initiative to sell off $2 billion in real estate holdings by the end of 2024 and focus its growth strategy on the operations side of the hospitality business. Hyatt expects to sell $1.5 billion of its real estate assets by the end of this year, which would result in more than $3 billion in sales since the strategy was announced in 2017.

Mark Hoplamazian, Hyatt president and CEO, notes that under this strategy, he expects that 80 percent of the company’s revenue stream will be fee-based earnings by the end of 2024.

“The addition of ALG’s properties will immediately double Hyatt’s global resorts footprint,” says Hoplamazian. “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 Europe, and further accelerate our industry-leading net rooms growth.”

ALG’s operations portfolio spans 33,000 rooms across 100 properties in 10 countries. ALG’s resort brand management platform AMResorts provides management services to a portfolio of luxury, all-inclusive resorts, including brands such as Secrets, Dreams, Breathless and Zoëtry.

Following ALG’s acquisition by Hyatt, which is scheduled to close in the fourth quarter, the company’s leadership team led by CEO Alejandro Reynal will become part of Hyatt’s executive team.

Hyatt expects to fund 80 percent of the acquisition with a combination of $1 billion in cash on hand and new debt financings. The remainder will be funded with approximately $500 million from equity financing. To this end, the company has secured a $1.7 billion financing commitment from J.P. Morgan.

Cash proceeds from the asset sale program will be used to pay down debt, including debt incurred to fund the acquisition of ALG.

Hyatt’s stock price opened at $72.02 per share on Monday, Aug. 16, the day the agreement was announced, up from $56.18 per share a year ago.

— Taylor Williams

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‣ Walker & Dunlop

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