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Hyatt doubles down on wellness with Miraval acquisition

Himalayan sound bath at Miraval
Himalayan sound bath at Miraval

Continuing its commitment to a holistic health and wellness strategy as an extension of its purpose, Hyatt Hotels Corp. on Wednesday announced its acquisition of New York-based wellness resort and spa operator Miraval Group from an affiliate of KSL Capital Partners.

The acquisition includes an initial investment of US$215 million for the Miraval brand and the resorts in Tucson, Arizona, and Austin, Texas. Hyatt expects to invest an additional US$160 million over the next two to three years to fund the expansion of the flagship Tucson resort with 10 new villas and more refinements, the redevelopment and rebranding of the 220-acre Travaasa Resort in Austin resort and the acquisition and redevelopment and rebranding of the 380-acre Cranwell Spa & Golf Resort in Lenox, Massachusetts.

The transaction also includes the acquisition of the Miraval Life in Balance Spa brand, which opened its first location in Dana Point, California, last year. The Austin property is expected to launch in Q1 2019; Lenox will open later in 2019; and the new villas in Tucson should be up and running before the end of 2017.

Hyatt will fund the investment with current operating cash flows and proceeds from the sale of existing assets, consistent with Hyatt’s asset recycling program. The company expects these investments to be marginally accretive to Adjusted EBITDA in 2017 and 2018, achieving a cash-on-cash yield in the high single digits within four to five years.

The resort in Tucson has been operational for just over 20 years and is known for its unique treatments and programs designed to help guests live life in balance. The brand will form a new wellness category within the Hyatt portfolio of brands. Steven Rudnitsky, president and chief executive officer of Miraval Group, will continue to drive the brand’s growth strategy, reporting to Hyatt President and CEO Mark Hoplamazian and working with the existing Miraval leadership team and associates.

“Purpose has been our guiding light and it’s about caring for people to help them be their best,” Hoplamazian told HOTELS on Tuesday. “We are always searching for new ways to do that. We are increasingly focused on high-end travelers and wellness is a key area, popping up everywhere from boardrooms to meeting arenas. For us, the opportunity to partner with and have the benefit of the unique programs Miraval has developed gives us a huge opportunity to get ahead of this trend in a big way.”

Miraval villa
Miraval villa

Hoplamazian added that the acquisition also extends the Hyatt brand into adjacent spaces beyond traditional hotel stays, which is core to Hyatt’s global growth strategy. “We recognize the business opportunity within the US$420 billion wellness-tourism category and understand the rising demand for wellness offerings among our targeted high-end travelers.”

He specifically referred to opportunities outside hotel spaces. “Wellness is one of the key areas that came out of a lot of engagement we’ve had with guests over last year or so, and it’s an area we want to approach in a way that is different than how hotel companies have approached it historically. This is a holistic approach because at Miraval’s core is a mindful approach. Mindfulness is the intelligence inside Miraval and informs how they approach what they do, and that is really unique.”

Rudnitsky added that Miraval’s success surrounds its ability to help people achieve life in balance. “This is becoming more important each day,” he said. “We have it figured out better and it becomes a platform for adjacent places in wellness beyond our resorts and spas, and even Hyatt hotels out there today. It’s a compelling opportunity.”

By “adjacent spaces,” Hoplamazian cited potential Miraval programming for Hyatt guests delivered outside hotels. “We have had discussions with clients about how they are approaching ways in which they can elevate productivity and effectiveness in business and in life,” Hoplamazian added. “Many large corporations are dedicating significant resources to approaches to elevate productivity and effectiveness, and we think we can play a role in that with Miraval… The fact that we are in position to create a connection into the C suite in a way that is unique adds a different dimension of growth and relevancy, and I think one of importance and value for our existing corporate clients, as well as Miravals. The growth potential is absolutely vast, but it is important to maintain Miraval’s integrity as we go into this. We are not just going to rush in and slap the Miraval brand name on a bunch of stuff and claim victory. On the contrary, what they created is very special and we must approach it with that respect.”

Further elaborating, Hoplamazian said growth opportunities for Miraval as business are significant and that Hyatt can help accelerate that. Within Hyatt, he said there are myriad opportunities with existing Hyatt spa operations, some of which might be appropriate for rebranding, as well as new resort development opportunities either as stand alone Miraval properties or via integration into Hyatt properties.

Rudnitsky added that he thinks there are a host of locations in North America to develop Miraval properties and now the opportunity to look outside North America exists with Hyatt’s supporting global footprint.

In closing, Hoplamazian stressed the acquisition represents a very significant opportunity for Hyatt. “The growth potential is very significant,” he said. “If you look at the trend line and see what people are spending on wellness travel the growth rate is significant and global. Miraval is not extended outside the U.S., but we will take this brand global. It resonates globally.”

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