Hyatt Hotels plans venturing into all-inclusive resorts segment

Hyatt-Hotel-to-bring-all-7-brands-in-IndiaAccording to news reports, Hyatt Hotels Corporation plans to enter the all-inclusive resorts segment in partnership with Playa Hotels & Resorts B.V. (Playa). Hyatt expects to invest a total of USD 325 million, consisting of USD 100 million for an approximate 20 per cent ownership stake in Playa and USD 225 million for convertible preferred stock in Playa. The investment is expected to take place in the current quarter.

The investment is subject to closing conditions, including approval by relevant authorities and completing certain other transactions. Playa was created with the goal of becoming a leading owner, operator and developer of all-inclusive resorts, the report stated.

Playa’s hotel portfolio will include 13 resorts, totalling approximately 5,800 rooms across the Dominican Republic, Mexico and Jamaica. In connection with the Hyatt investment, Playa will enter into franchise agreements with Hyatt for six of the 13 resorts, or approximately 2,800 rooms, which will operate under Hyatt brands following the completion of renovations.

Under an agreement with Hyatt, Playa will pursue the acquisition or development of new, all-inclusive resort opportunities under Hyatt’s brands and will have certain rights to operate Hyatt-branded all-inclusive resorts in five Latin American and Caribbean countries on an exclusive basis through 2018.

The first two Hyatt-branded all-inclusive resorts, located in Mexico, will be introduced later this year, following multimillion-dollar renovations of existing properties. Four additional Hyatt-branded resorts in Jamaica, Mexico and the Dominican Republic are expected to be introduced in 2014 and 2015.

Stephen Haggerty, Global Head, Real Estate and Capital Strategy, Hyatt, said, “The all-inclusive segment has grown rapidly over the past 20 years. This transaction will position us to introduce Hyatt’s authentic hospitality to a new guest base, while offering great new resort options in sought-after destinations to our existing guests. Our agreement with Playa also provides us with a platform for future global growth in an attractive segment, and our investment is structured to generate strong returns through our common and preferred interests as well as recurring franchise fees.”

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