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Marriott International has agreed to a deal to buy Elegant Hotels for $130.1 million in a move that will see the company expand its all-inclusive offering in the Caribbean.
Elegant Hotels owns and operates seven hotels with 588 rooms and a beachfront restaurant on the island of Barbados.
“There is a strong and growing consumer demand for premium and luxury properties in the all-inclusive category,” Arne Sorenson, Marriott’s CEO, said. “The addition of the Elegant portfolio will help us further jumpstart our expansion in the all-inclusive space, while providing more choices on the breathtaking island of Barbados for our 133 million Marriott Bonvoy members.”
After completing the deal, Marriott is planning to renovate the hotels and rebrand them as all-inclusives under one of its brands. In keeping with its asset-light strategy it will also sell them off while keeping hold of the management contracts.
Simon Sherwood, non-executive chairman of Elegant Hotels, said the deal represented “compelling value” for the company’s shareholders.
“The fact that Elegant Hotels has attracted the interest of a company of Marriott’s calibre is a resounding endorsement of the outstanding quality of our properties, operations and people, and indeed of Barbados as a highly desirable destination. We are therefore unanimously recommending the offer to our shareholders,” he said.
The offer values Elegant Hotels at around $199 million based on its total net debt of $68.9 million.
Having lagged behind some of its rivals in its all-inclusive offering, Marriott has been playing catch-up in 2019. In August the company announced plans to spend $800 million building two new resorts, one each in the Dominican Republic and Mexico.
One of the big benefits of going deeper into all-inclusives is their attractiveness to loyalty club members. Marriott has spent the last few months shouting about its Bonvoy brand, and is clearly focussing a lot of its attention on making it more appealing.
Adding Elegant Hotels to its portfolio should help but might it want to go further? Bloomberg reported in September that Sandals Resorts, perhaps the biggest name in Caribbean all-inclusive resorts, had restarted its sales process. It would be considerably more expensive — around $4.5 billion — than the $130 million paid for Elegant Hotels but with 24 properties across the region, would give it a substantially bigger footprint.