Amid concerns about the spread of the highly-contagious delta variant, Hyatt Hotels is expanding its luxury hotels and resorts by acquiring Apple Leisure Group from KKR and KSL Capital Partners.
The company is placing a bet on leisure travel, pushing its revenues from the segment over the 50% mark, from 45%, with business travel making up the rest of its revenues.
“Leisure was the first segment to return and recover subsequent to most of the downturns in the last 20 years. We obviously have seen a robust recovery in this one,” Mark Hoplamazian, President and CEO of Hyatt, said in an interview on CNBC’s “Closing Bell” on Monday.
“It’s not a change in strategy, it’s a recognition that leisure is durable and has been resilient.”
The $2.7 billion cash deal is expected to close in the fourth quarter of 2021.
The acquisition of the leisure travel and resort brand management company would add roughly 33,000 rooms across 100 hotels to Hyatt’s portfolio.
“We are not underwriting this transaction on what happens in the next four weeks or four months, but rather on what happens farther in the future,” Hoplamazian said. “We think this is going to be a growing segment.”
This transaction expands the company’s European presence by 60%, Hoplamazian said.
Apple Leisure Group will still be under the leadership of CEO Alejandro Reynal, who will become a member of Hyatt’s executive leadership team and report to Hoplamazian.
Shares of Hyatt Hotels are down 2.28% this year putting its market cap at $7.4 billion.