Hyatt to buy resorts operator Apple Leisure Group for $2.7bn

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Hyatt, the US hotel group, has agreed to buy the private equity backed resorts operator Apple Leisure Group for $2.7bn, expanding its reach in the fast recovering leisure travel market.

Apple Leisure, owner of the Zoetry and Sunscape resort brands, will allow Hyatt to vastly increase its share of the luxury resorts market, which has proved one of the most resilient during the pandemic as customers rush to book holidays after long periods of lockdown.

Hyatt said it will fund the acquisition through cash and debt financing. It will also add $2bn worth of assets to an existing programme of hotel real estate sales in order to pay down the debt.

Hyatt aims to generate 80 per cent of its revenues from management fees, as opposed to owning and leasing hotels, by 2024.

The deal values Apple Leisure, an asset-light operator, at $2.7bn including debt.

Mark Hoplamazian, Hyatt’s chief executive, said on Sunday that “right out of the block” the deal would double the number of Hyatt resorts around the world, but that Apple Leisure had completed a further 24 deals for new resorts and had 40 under negotiation.

“The fact is that leisure travel is proven to be extremely durable and something that is going to be enduring in terms of demand and I think that the all-inclusive approach is very attractive to a lot of customers,” he said

The deal is the latest move by major hotel chains to expand their reach into luxury leisure travel, which has bounced back more quickly as international travel restrictions have eased. InterContinental Hotel Group announced on Tuesday that it planned to launch a luxury resort brand in the next three weeks, while Marriott, the world’s largest hotel group, has also said it wants to increase its all-inclusive resort offering.

There is simply no better home for ALG to continue on its growth trajectory than being part of Hyatt.

Accor, the largest hotel group in Europe, spun of its high end leisure assets into a joint venture with the Hoxton hotel chain operator Ennismore last year.

Apple Leisure Group, which is currently owned by the US private equity group KKR and the travel specialist KSL, operates around 100 all-inclusive luxury resorts as well as a one of the largest tour operators for package holidays from the US to Mexico and the Caribbean. It also runs Unlimited Vacation Club, a subscription scheme that offers discounts and perks for travellers.

The acquisition will add approximately 28,500 employees to Hyatt, which was forced to lay off a quarter of its head office staff during the pandemic.

Hoplamazian said that the demographic of the Apple Leisure customer was similar to Hyatt’s, whose core strategy is to target wealthier travellers. The deal would “extend and expand the different ways we can care for those travellers,” he added.

The Hyatt boss said that while other competitors had entered the luxury leisure market, “they haven’t expanded significantly yet” and that Apple Leisure would give Hyatt “a resource base and an expertise base that will put [the company] in a very strong position to grow that platform more affirmatively and more successfully over time”.

Acquiring Apple Leisure will also allow Hyatt to expand its portfolio of hotels in Europe by 60 per cent.

Chris Harrington and Rich Weissman, partners at KKR and KSL Capital Partners, said: “There is simply no better home for ALG to continue on its growth trajectory than being part of Hyatt.”

Apple Leisure’s management team, led by chief executive Alejandro Reynal, will continue to run the company under Hyatt.

Hyatt was advised by BDT & Company, JPMorgan and Latham & Watkins. KKR and KSl were advised by PJT Partners and the law firm Simpson Thacher & Bartlett.