Hyatt to Buy KKR-Backed Apple Leisure Group for $2.7 Billion

Hyatt Hotels Corp. agreed to buy KKR & Co.-backed resort company Apple Leisure Group for $2.7 billion in cash, betting that demand for leisure travel will continue to bounce back despite the pandemic.

Hyatt, led by Chief Executive Officer Mark Hoplamazian, is acquiring Apple Leisure’s portfolio of brands, which includes 33,000 hotel rooms concentrated in all-inclusive resorts in Mexico, the Caribbean, and Europe, according to a statement on Sunday.

Apple Leisure also operates platforms for marketing vacation packages to consumers and travel agents, and is a major seller of charter flights from the U.S. to Mexico and the Caribbean

The deal, which Hyatt plans to pay for with cash on hand as well as new debt and equity financing, comes at a precarious time for the global hospitality industry. Americans have been spending heavily on summer vacations, helping U.S. hotels rebound to pre-pandemic levels.

But travel remains muted in much of the world, and the inability to get the Covid-19 pandemic under control is jeopardizing a nascent corporate travel recovery.

“We are thrilled to bring a highly desirable independent resort management platform into the Hyatt family,” Hoplamazian said. Apple Leisure’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 in Europe, and further accelerate our industry-leading net rooms growth.”

Hyatt’s shares were down less than 1% at $71.92 as of 9:42 a.m. in New York. The stock had slipped 2.8% this year through Friday’s close.

KKR and KSL Capital Partners agreed to acquire Apple Leisure from Bain Capital in 2016. The travel company’s portfolio includes all-inclusive resort brands including Secrets, Dreams, Breathless and Zöetry. Last June, the pandemic-battered company hired advisers to explore raising new capital, Bloomberg News reported.

The acquisition will increase Hyatt’s European footprint by 60%, according to a note from Robert W. Baird & Co. analyst Michael Bellisario.

The transaction will also accelerate Hyatt’s asset-light transformation. Hyatt committed to sell an additional $2 billion in hotel real estate by the end of 2024, according to the statement.

Hyatt expects to fund the purchase with a combination of $1 billion of cash on hand and new debt financings, and the remainder with about $500 million from equity financing.

The deal is expected to close in the fourth quarter of 2021, subject to customary closing conditions. The Wall Street Journal first reported on the deal.

©2021 Bloomberg L.P.

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