Hyatt Hotels Corporation agreed to buy Playa Hotels & Resorts for about $2.6 billion including $900 million in debt in a deal aimed at strengthening the company’s position in the all-inclusive resort business in Mexico, Jamaica, and the Dominican Republic.
Acquisition Details
Under the deal, Hyatt will acquire all the outstanding shares of Playa at $13.50 per share, a 40% premium over the share price of Playa as of December 20, 2024. The deal is expected to be completed later in the year after obtaining regulatory and shareholder approvals.
Strategic Rationale
Hyatt expects this acquisition to strengthen its portfolio of all-inclusive resorts through brands such as Ziva and Zilara. Following the initial investment Hyatt had made in Playa in 2013, both Ziva and Zilara were first established. In order to solidify its leading position in leisure travel destinations, Hyatt looks to secure long-term management agreements for these brands.
Financing and Asset Management
Hyatt aims to finance this acquisition through new debt and will keep its asset-light model by divesting some of the properties of Playa. The company will generate around $2 billion from these asset sales by 2027, to pay off the debts incurred through this acquisition.
Market Impact
Following the notification, Playa rose by 2.3%, whereas the shares of Hyatt declined by 0.4%. Investors expect Hyatt to post a 17% rise in earnings, which shows the optimism towards its expanded footprint of all-inclusive resorts.
Immediate Future
This acquisition will complement Hyatt’s strategy of strengthening its presence in high-demand leisure markets. Upon integrating the 24 luxury all-inclusive resorts owned by Playa into its portfolio, Hyatt is in a better position to provide guests with an expanded range of products to reinforce the company’s growth in the Caribbean and Mexican market sectors.
