Hyatt Hotels Corporation last week announced that Hyatt has agreed to acquire Apple Leisure Group (ALG) for $2.7 billion in cash. The transaction is anticipated to close in the fourth quarter of 2021, subject to customary closing conditions.
ALG’s resort brand management platform AMResorts provides management services to the largest portfolio of luxury all-inclusive resorts in the Americas under the AMR Collection brand portfolio, including well-known brands Secrets Resorts & Spa, Dreams Resorts & Spas, Breathless Resorts & Spas and Zoetry Wellness & Spa Resorts as well as the fast-growing Alua Hotels & Resorts brand, which is expanding in European leisure destinations. The acquisition also includes ALG’s travel distribution business ALG Vacations, as well as destination management services and travel technology assets.
“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,” said Mark Hoplamazian, president and chief executive officer, Hyatt in a press statement. “The addition of ALG’s properties will immediately double Hyatt’s global resorts footprint. ALG’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. 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.”
ALG’s hotel portfolio consists of over 33,000 rooms operating in 10 countries. The portfolio has grown from nine resorts in 2007 to approximately 100 properties by the end of 2021 and has a pipeline of 24 executed deals with a large number of additional hotels in the development process.
“Combining Hyatt’s deep expertise and global brand footprint with ALG’s strong resort brands, operating capabilities and robust development plans will elevate our differentiated position and create a leader in luxury leisure travel,” said Alejandro Reynal, chief executive officer, Apple Leisure Group. “I am excited to have our team join the Hyatt family and I anticipate a robust growth journey ahead as the industry expands and we are able to provide a best-in-class leisure offering to an even larger group of travelers around the world.”
Hyatt's Purchase Strategy
- Expand footprint in luxury and resort travel: The acquisition will expand Hyatt’s presence in luxury leisure travel and immediately add approximately 100 hotels and a pipeline of 24 executed deals in Europe and the Americas to its portfolio. Following completion of the transaction, Hyatt will offer the largest portfolio of luxury all-inclusive resorts in the world, will double its global resort footprint, will be the largest operator of luxury hotels in Mexico and the Caribbean, and will expand its European footprint by 60 percent. The acquisition will extend Hyatt’s brand footprint into 11 new European markets, greatly enhancing Hyatt’s growth potential in Europe, a critical region for global growth in leisure travel.
- Expand platform for growth: ALG’s strong developer and owner base will expand Hyatt’s relationships with deeply committed partners in key complementary geographies. Hyatt’s global network of developers and its operational expertise is expected to further accelerate growth of ALG brands. Hyatt plans to apply the combined strength of the teams to expand beyond ALG’s current pipeline in new geographies in which ALG does not currently have hotels.
- Increase choice and experiences for guests: The combined resources of ALG and Hyatt will open up expanded offerings and experiences for the benefit of the combined companies’ high-end guest and customer base.
- Enhance end-to-end leisure travel offerings through:
- ALG Vacations as one of the largest packaged tour providers and leisure travel distribution platforms in North America serving Mexico and the Caribbean,
a leading destination services management company in Mexico and the Caribbean, and its Hawaii-focused counterpart Worldstar, and Trisept Solutions , its leisure travel technology platform.
That was the official cliif notes version of the press release. Now my inside industry thoughts on this. Hyatt was growing it's own All Inclusive brands in Zilara & Ziva, as direct competiton to ALG's Secrets and Dreams, so now what Hyatt, do you continue to grow Ziva & Zilara? I'm not so sure, now that you own the biggest all inclusive brands in the industry. A lot of clientele have no idea that ALG runs several vacation companies under their banner, such as Apple Vacations & Travel Impressions. How does Hyatt justify operating these two vacation companies that sell all their competitors hotels and resorts, and helping those brands make a profit. Isn't that pointless now? I could see Apple & Travel Impressions being merged and then after that combo move, I could the resulting vacation company under Hyatt being an exclusive way to sell all the ALG & Hyatt brands.
This is very interesting as just a few weeks ago ALG's AM Resorts announced a major rebranding of all their brands into a new brand name called the AMR Collection, and within the collection were all the AM Resort Brands (I honestly at the time thought what the hell is the point of that?). I have to think that the top brass knew the Hyatt announcement was coming any day, and this restructing was at Hyatt's request in prep for what's coming down the line. The size of this purchase is comparable to when Marriott bought Starwood. Hyatt instanty becomes the biggest all inclusive owners in the Caribbean & Mexico, no one can even compete with the number of rooms Hyatt will now control in the region. They went from getting their feet wet in the all inclusive game, to the biggest whales.
I'm not sure I like this, over my entire career I used Apple Vacations to souce all the best vacation programs for my clients, then when I came on with Avenue Two Travel, a Virtuoso agency, I moved most of my vacation business towards Travel Impressions or other vacation suppliers. These are great sources to price all the different brands and find the best vacation options for my clients all on one platform, with Hyatt owning the platforms you have to think certain brands will be dropped, and Hyatt & ALG brands will be highly featured, put forward first, and undercut any similiar competition. I just don't see any fair way forward that Hyatt can run these platforms as they are now.
On the flip side as Hyatt Prive preferred advisor I'm excited to have ALG come into that fold, and how this will influence future sales for my clients with AMR Collection Resorts. Will I sell these resorts through ALG still, will I sell them through Hyatt Prive? Before Hyatt didn't own a vacation platform company, and so they sold some of their allotment blocks to ALG and other vacation vendors. Now with Hyatt owning the biggest vacation platform for the Caribbean, Mexico and Hawaiii.. You can bet the likelyhood of allotment being offered to other vacation vendors is going to be great reduced. Why pay a vacation operator like Classic Vacations to sell rooms and a slice of the profits, when now Hyatt can do so themselves through ALG.
Other minor questions also arise, such as how will this impact both the client and advisor reward programs both Hyatt & ALG have? What's ahead will be interesting to see.
Though another thought is higher end clientele tend not to favor all inclusive's, opting for more luxurious accommodations, and more refined dining, and a la carte type pricing. Secrets is considered luxury adults only all inclusive, and the accommodations can be very nice, Dreams is the family friendly version of Secrets. I've sent a lot of clientele the AMR Collection brands over the years, and for the most part usually perfer them over Ziva & Zilara's. Though I do get bored of every single Secrets/Dreams/Now having the same damn dining venues everywhere you go, and while the food is good and the dining venues are nicely designed, they cannot compare to a nice refined a la carte venue in a Hyatt Regency or Grand Hyatt Resort.
As you can tell I'm torn on how to take this news, I think alot will be decided in the coming months on how Hyatt treats this purchase, their are many pieces involved in ALG, and don't think they all will fit into Hyatt's future ideals. Regardless how I feel, Hyatt has bought the keys to the all inclusive castle, they own the game now.
Would I call it a monopoly on the all inclusive market???? Maybe....
Avenue Two Travel
Luxury Travel Advisor