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How Apple deal benefits Hyatt: A big play for luxury, all-inclusives: Travel Weekly

Posted on August 28, 2021 by sNawaWebs.ADV

The pandemic has done little to curb the hospitality industry’s appetite for all-inclusive expansion, with Hyatt Hotels Corp.’s agreement to acquire Apple Leisure Group (ALG) turning up the heat in an already white-hot sector.

The $2.7 billion transaction, which is set to close in the fourth quarter, was the biggest all-inclusive play by a leading global hotel company to date and signals what may be the beginning of an all-out all-inclusives arms race. 

For Hyatt, the deal’s crown jewel is ALG’s resort management arm, AMResorts, which oversees AMR Collection, a 102-property portfolio spanning more than 33,000 guestrooms in 10 countries. The AMR Collection stable includes the four- and five-star Secrets, Dreams, Breathless, Zoetry, Alua and Sunscape flags.

On a call with investors, media and analysts on Aug. 16, Hyatt CEO Mark Hoplamazian said the addition of AMR Collection will make Hyatt the world’s top operator of luxury all-inclusive resorts by room count.

“We believe [this] will position us to be the preferred brand for high-end leisure travelers, now and well into the future,” he said, adding that the leisure travel sector, in particular, has proven resilient despite the challenges of Covid.

The ALG acquisition builds on Hyatt’s existing all-inclusive presence, which began in 2013 in partnership with Playa Hotels and Resorts, an operator of all-inclusive resorts focused on Mexico and the Caribbean. That produced two new brands: the family-friendly Hyatt Ziva and adults-only Hyatt Zilara.

Hyatt and Playa have since opened eight Hyatt Ziva and Zilara resorts in Mexico, Jamaica and the Dominican Republic. The Hyatt Ziva Riviera Cancun is due to open later this year.

Although Hyatt’s takeover of ALG sheds some uncertainty on how Hyatt and Playa might navigate their relationship moving forward, Playa said the relationship between the two companies remains “unchanged.”

“From our founding, the vision has always been expanding global hospitality brands within the all-inclusive sector, and Hyatt Hotels Corp. was the first to share that vision with us,” Playa said in a statement. “With our existing Hyatt Ziva and Hyatt Zilara resorts, along with recently announced expansion plans for these two brands, we expect even greater success.” 

The Secrets Cap Cana in the Dominican Republic.

The Secrets Cap Cana in the Dominican Republic.

Hyatt isn’t the only hospitality heavyweight jockeying for a share of the lucrative all-inclusive market. Marriott International and Hilton also have made high-profile efforts in the space, with Marriott announcing a flurry of expansion, reflagging and acquisition efforts and Hilton planting a handful of all-inclusive flags throughout Mexico and the Caribbean, including several in partnership with Playa.

But with AMR Collection’s sizable portfolio under its belt, Hyatt now appears to have a “big leg up” on competitors, said Geoff Millar, an all-inclusive specialist and co-owner of Ultimate All-Inclusive Travel and Ultimate Hawaii Vacations in Gilbert, Ariz.

“A lot of the big hotel companies didn’t really take the all-inclusive resort market that seriously,” Millar said. “But now they’re seeing the demand as well as the quality. Hyatt knew it better get on the bandwagon, and by buying AMResorts, they now have a portfolio of some of the top all-inclusive resorts in the world.”

What about vacation packages?

For Millar, the big question is: How will Hyatt integrate and leverage ALG’s wholesale vacations businesses, which include packaged-travel brands Apple Vacations, Funjet Vacations, Blue Sky Tours Hawaii, Travel Impressions, CheapCaribbean and BeachBound as well as Mexico- and Caribbean-focused destination-management company Amstar.

Although the vacation brands represent substantial business — Hoplamazian said they booked around 3.1 million passengers in 2019 — AMR Collection, which hosted more than 12 million guests in 2019, is a more natural fit for Hyatt’s core business.

In his comments to investors, Hoplamazian described ALG’s vacations operations as a “high-volume and low-margin business.”

Millar said, “I don’t think Hyatt really wants to be a [wholesaler]. So, I’m curious to see what happens with [non-hospitality assets] down the line.”

Notably, ALG’s packaged-travel businesses sell a diverse array of resort brands, not just AMR Collection’s all-inclusives. Of the 70% of ALG’s vacations business that is outside the U.S., focused primarily on Mexico and the Caribbean, only about 20% to 25% of that volume is funneled toward AMR Collection, Hoplamazian said.

“A hotel brand will now own a tour operator that sells competing brands,” said Tamara Jacobs, a travel consultant and advisor at Destinations by Tamara in Marietta, Ga., an affiliate of the Oasis Travel Network. “How that will work and shake out will be interesting to see.”

A pledge to keep ALG intact

Still, Hoplamazian has remained steadfast in his pledge to keep much of ALG’s operations intact, announcing that the company will exist as a separate entity within the Hyatt ecosystem, while also hinting at potential synergies between the Hyatt and ALG vacations brands.

“[We recognize] that this is a different business than our core hotel operating platform, primarily because the all-inclusive management base includes a very different distribution channel profile than ours does,” said Hoplamazian. “We learned this from our prior experience with Hyatt Ziva and Zilara, and we have a tremendous respect for that.”

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