Hyatt's Apple Leisure Group acquisition gives it a major boost in its desired expansion into Europe. But it is also a shot across the bow to competitors like Marriott and Hilton as well as smaller brands. The battle is on to expand into the high-end leisure travel and all-inclusive resort sector.
It didn’t take long for Hyatt to move ahead with a planned expansion into Europe.
The Chicago-based hotel company announced Sunday night plans to buy Apple Leisure Group for $2.7 billion. The acquisition of the company behind resort brands like Dreams, Secrets, and Zoëtry expands Hyatt’s brand footprint into 11 new European markets and doubles the company’s global resort footprint.
Hyatt’s overall European footprint would also grow by 60 percent with the deal. Roughly 100 existing hotels and a 24-property development pipeline across Europe and the Americas are included in the deal.
The move is the latest chapter in Hyatt’s ongoing initiative to become increasingly asset light and own less of its hotel real estate. ALG is a resort management services, travel, and hospitality group — the kind of business Hyatt is trying to be in its push away from real estate ownership.
Hyatt is underway with a plan to sell off $1.5 billion of its owned hotels, and the company announced a new initiative to sell off another $2 billion on top of the ALG acquisition.
“With the asset-light acquisition of Apple Leisure Group, we are thrilled to bring a highly desirable independent resort management platform into the Hyatt family,” Hyatt CEO Mark Hoplamazian said in a statement. “Importantly, the combination of this value-creating acquisition and the $2 billion increase in our asset sale commitment will transform our earnings profile, and we expect Hyatt to reach 80 percent fee-based earnings by the end of 2024.”
The Strategy: Hyatt’s play for ALG checks off two major boxes for a major hotel company like Hyatt. Hoplamazian indicated on an investor call earlier this month any acquisition the company made in the near-term would likely be about gaining a bigger presence in Europe, likely through smaller brands or “groupings of hotels” in the region.
“We feel that we’ve come through the pandemic and [are] now into recovery mode at a healthy clip with respect to earnings and cashflow,” he added. “As always, growing the company in a very deliberate, strategic way is our top priority.”
The acquisition, slated to close by the end of the year, also gives Hyatt a bigge