Hyatt Discloses Exclusive Discussions With Playa Hotels & Resorts N.V.

Rhea-AI Summary

Hyatt Hotels (NYSE: H) has entered into exclusive negotiations with Playa Hotels & Resorts (NASDAQ: PLYA) regarding potential strategic alternatives, including a possible acquisition of Playa by Hyatt. Playa, described as one of the world's strongest operators of all-inclusive resorts, owns high-end properties across the Caribbean and Mexico.

CEO Mark Hoplamazian emphasized that any strategic alternatives would align with Hyatt's asset-light business model and could add new durable fee streams. Currently, Hyatt owns 9.99% of Playa's outstanding shares. The company's portfolio includes more than 1,350 hotels and all-inclusive properties across 79 countries, spanning various brands in Luxury, Lifestyle, Inclusive, Classics, and Essentials portfolios.

Positive

• Potential acquisition could add new durable fee streams
• Strategic alignment with asset-light business model
• Expansion opportunity in high-end all-inclusive resort segment
• Already owns 9.99% stake in target company

Negative

• None.

Insights

M&A Specialist

This exclusive negotiation agreement between Hyatt and Playa Hotels represents a potentially transformative deal in the hospitality sector. The strategic rationale is compelling - Playa's portfolio of high-end all-inclusive resorts in the Caribbean and Mexico would significantly expand Hyatt's presence in the rapidly growing all-inclusive segment while aligning with their asset-light strategy through fee-based revenue streams.

The existing 9.99% ownership stake in Playa provides Hyatt with valuable insights into the target's operations and potential synergies. The emphasis on maintaining an asset-light approach suggests a potential deal structure involving franchise/management agreements rather than direct property ownership. This would allow Hyatt to grow its fee-based earnings while minimizing capital intensity.

For investors, this signals Hyatt's strategic pivot towards expanding its fee-based revenue streams and capitalizing on the premium all-inclusive resort segment's growth potential. The market for luxury all-inclusive resorts has shown resilience and strong demand, particularly in the post-pandemic travel recovery.

Hospitality Industry Analyst

The potential acquisition perfectly aligns with current hospitality industry trends. The all-inclusive model has evolved from budget-focused offerings to high-end luxury experiences, with strong consumer demand driving premium pricing. Playa's portfolio would give Hyatt immediate scale in this lucrative segment.

The geographic focus on the Caribbean and Mexico is particularly strategic, as these markets have shown robust recovery and growth in luxury leisure travel. The combination would strengthen Hyatt's competitive position against other major hotel groups expanding in the all-inclusive space.

The emphasis on "durable fee streams" is important - it suggests a focus on management contracts that provide steady, high-margin revenue rather than capital-intensive property ownership. This approach typically yields 15-20% EBITDA margins on managed properties versus 25-30% lower margins on owned properties, while requiring significantly less capital investment.

CHICAGO--(BUSINESS WIRE)-- Hyatt Hotels Corporation (the “Company” or “Hyatt”) (NYSE: H) today disclosed it has executed an exclusivity agreement with Playa Hotels & Resorts N.V. (“Playa”) (NASDAQ: PLYA) under which Playa has agreed to negotiate exclusively with Hyatt regarding potential strategic alternatives, which may include the acquisition of Playa by Hyatt.

Mark S. Hoplamazian, President and Chief Executive Officer of Hyatt, said, "Playa has been a valuable partner for many years, is one of the world’s strongest operators of all-inclusive resorts, and owns a premier portfolio of high-quality, high-end all-inclusive resorts in iconic locations and key markets across the Caribbean and Mexico. Strategic alternatives under consideration could have compelling strategic merit to add new incremental durable fee streams for Hyatt. We remain steadfastly committed to our asset-light business model and if this process continues, we will continue to map out a clear path for an asset-light outcome for any strategic alternatives we undertake.”

There can be no assurances that any transaction will result from Hyatt’s exclusive discussions with Playa, or on what terms. Hyatt does not intend to comment further on these discussions unless and until a definitive agreement has been fully executed.

As required by federal securities laws, Hyatt, which is the beneficial owner of 9.99% of Playa’s outstanding shares, has filed an amendment to its Schedule 13D with the U.S. Securities and Exchange Commission to disclose these discussions.

About Hyatt Hotels Corporation

Hyatt Hotels Corporation, headquartered in Chicago, is a leading global hospitality company guided by its purpose – to care for people so they can be their best. As of September 30, 2024, the Company's portfolio included more than 1,350 hotels and all-inclusive properties in 79 countries across six continents. The Company's offering includes brands in the Luxury Portfolio, including Park Hyatt®, Alila®, Miraval®, Impression by Secrets, and The Unbound Collection by Hyatt®; the Lifestyle Portfolio, including Andaz®, Thompson Hotels®, The Standard®, Dream® Hotels, The StandardX, Breathless Resorts & Spas®, JdV by Hyatt®, Bunkhouse® Hotels, and me and all hotels; the Inclusive Portfolio, including Zoëtry® Wellness & Spa Resorts, Hyatt Ziva®, Hyatt Zilara®, Secrets® Resorts & Spas, Dreams® Resorts & Spas, Hyatt Vivid Hotels & Resorts, Sunscape® Resorts & Spas, and Alua Hotels & Resorts®; the Classics Portfolio, including Grand Hyatt®, Hyatt Regency®, Destination by Hyatt®, Hyatt Centric®, Hyatt Vacation Club®, and Hyatt®; and the Essentials Portfolio, including Caption by Hyatt®, Hyatt Place®, Hyatt House®, Hyatt Studios, and UrCove. Subsidiaries of the Company operate the World of Hyatt® loyalty program, ALG Vacations®, Mr & Mrs Smith, Unlimited Vacation Club®, Amstar DMC destination management services, and Trisept Solutions® technology services. For more information, please visit www.hyatt.com.

Forward-Looking Statements

Forward-Looking Statements in this press release, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. These statements include statements about Hyatt’s discussions with Playa regarding strategic alternatives and its commitment to an asset-light business model and involve known and unknown risks that are difficult to predict. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by us and our management, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the rate and pace of economic recovery following economic downturns; global supply chain constraints and interruptions, rising costs of construction-related labor and materials, and increases in costs due to inflation or other factors that may not be fully offset by increases in revenues in our business; risks affecting the luxury, resort, and all-inclusive lodging segments; levels of spending in business, leisure, and group segments, as well as consumer confidence; declines in occupancy and average daily rate; limited visibility with respect to future bookings; loss of key personnel; domestic and international political and geopolitical conditions and political or civil unrest or changes in trade policy; hostilities, or fear of hostilities, including future terrorist attacks, that affect travel; travel-related accidents; natural or man-made disasters, weather and climate-related events, such as earthquakes, tsunamis, tornadoes, hurricanes, droughts, floods, wildfires, oil spills, nuclear incidents, and global outbreaks of pandemics or contagious diseases, or fear of such outbreaks; our ability to successfully achieve certain levels of operating profits at hotels that have performance tests or guarantees in favor of our third-party owners; the impact of hotel renovations and redevelopments; risks associated with our capital allocation plans, share repurchase program, and dividend payments, including a reduction in, or elimination or suspension of, repurchase activity or dividend payments; the seasonal and cyclical nature of the real estate and hospitality businesses; changes in distribution arrangements, such as through internet travel intermediaries; changes in the tastes and preferences of our customers; relationships with colleagues and labor unions and changes in labor laws; the financial condition of, and our relationships with, third-party owners, franchisees, and hospitality venture partners; the possible inability of third-party owners, franchisees, or development partners to access the capital necessary to fund current operations or implement our plans for growth; risks associated with potential acquisitions and dispositions and our ability to successfully integrate completed acquisitions with existing operations; failure to successfully complete proposed transactions (including the failure to satisfy closing conditions or obtain required approvals); our ability to maintain effective internal control over financial reporting and disclosure controls and procedures; declines in the value of our real estate assets; unforeseen terminations of our management and hotel services agreements or franchise agreements; changes in federal, state, local, or foreign tax law; increases in interest rates, wages, and other operating costs; foreign exchange rate fluctuations or currency restructurings; risks associated with the introduction of new brand concepts, including lack of acceptance of new brands or innovation; general volatility of the capital markets and our ability to access such markets; changes in the competitive environment in our industry, industry consolidation, and the markets where we operate; our ability to successfully grow the World of Hyatt loyalty program and Unlimited Vacation Club paid membership program; cyber incidents and information technology failures; outcomes of legal or administrative proceedings; and violations of regulations or laws related to our franchising business and licensing businesses and our international operations; and other risks discussed in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including our annual report on Form 10-K and our Quarterly Reports on Form 10-Q, which filings are available from the SEC. These factors are not necessarily all of the important factors that could cause our actual results, performance or achievements to differ materially from those expressed in or implied by any of our forward-looking statements. We caution you not to place undue reliance on any forward-looking statements, which are made only as of the date of this press release. We undertake no obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

HHC-FIN

View source version on businesswire.com: https://www.businesswire.com/news/home/20241222188763/en/

Investors:

Adam Rohman

+ 1 312.780.5834

adam.rohman@hyatt.com

Ryan Nuckols

+1 312.780.5784

ryan.nuckols@hyatt.com

Media:

Franziska Weber

+ 1 312.780.6106

franziska.weber@hyatt.com

Source: Hyatt Hotels Corporation

FAQ

What is the potential impact of Hyatt's (H) possible Playa Hotels acquisition on its business model?

The acquisition would align with Hyatt's asset-light business model and could add new durable fee streams, potentially enhancing the company's revenue structure while maintaining its strategic direction.

How many properties does Hyatt (H) currently operate as of September 30, 2024?

Hyatt operates more than 1,350 hotels and all-inclusive properties across 79 countries on six continents.

What is Hyatt's (H) current ownership stake in Playa Hotels & Resorts?

Hyatt currently owns 9.99% of Playa Hotels & Resorts' outstanding shares.

How would the potential Playa acquisition affect Hyatt's (H) presence in the Caribbean and Mexico?

The acquisition would strengthen Hyatt's presence in these regions by adding Playa's portfolio of high-quality, high-end all-inclusive resorts in iconic locations across the Caribbean and Mexico.