Deal Making in Luxury Travel Heats Up

Hyatt Buys Apple Leisure for $2.7 Billion

Hyatt (H) is betting that luxury travel will be a huge growth driver, spending $2.7 billion to buy Apple Leisure Group, which operates high-end resorts. The deal expands Hyatt’s presence in the luxury resorts market—an area which is seeing strong demand amidst pandemic recovery.

With business travel slow to come back from pandemic shutdowns, international hotel-chain operators are focusing their attention on consumers.

Hyatt is not alone in pursuing this strategy. Last week, InterContinental Hotels (IHG) rolled out plans to launch a new luxury brand which will increase the number of luxury hotels it operates.

Hyatt Expands Its High-End Footprint

Hyatt is buying Apple Leisure from PE firms KKR (KKR) and KSL Capital Partners. The deal will double Hyatt’s footprint of luxury resorts across the world. Once the transaction closes, Hyatt will become the biggest luxury-resort operator in both Mexico and the Caribbean, and will also enter 11 new markets in Europe. That is particularly important because Europe is expected to be a big growth area for high-end travel.

Apple Leisure is the largest operator of luxury resorts in the Americas and has been expanding into Europe in recent years. It had nine resorts in 2007and today has about 100 in 10 countries.

Hyatt Transitions to Asset-Light Business Model

The acquisition is part of Hyatt’s strategy to transition to an asset-light business in which it makes recurring revenue from management fees. By the end of 2024 Hyatt wants to generate about 80% of its revenue from management fees instead of owning hotels. It is aiming to unload $3.5 billion in hotel properties in the next three years. Of that, $1.5 billion is slated to be sold this year.

With business travel in a holding pattern as cases of COVID-19 rise, hotel operators are betting wealthy individuals will continue to spend money on luxury travel. They are doubling down, pouring billions of dollars into expanding their footprints. It will be interesting to see if these bets pay off.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21081703