Hyatt Hotels Corp., Chicago, announced on Friday that it signed an agreement to acquire 24 hotels from the privately-held LodgeWorks, a private hotel development, ownership and management company, and its private equity partners, for US$802 million. The deal is expected to close in the third quarter.
All the properties are located in the U.S., including five in California, two in Washington, two in Virginia, two in Pennsylvania, two in North Carolina as well as other states. All the hotels will be managed by Hyatt and branded under Hyatt labels, including 16 Hotel Sierra locations that will become Hyatt Summerfield Suites. Five properties, including the AVIA Hotels, are expected to be converted to full service Hyatt brands.
“This transaction is a noteworthy step in that direction, and will give us an immediate boost in brand awareness among both guests and potential third party developers,” Hyatt President and CEO Mark Hoplamazian said. “The extended stay hotels coming into the portfolio are, on average, four years old – and many have been open less than two years – making them welcome additions to our brand. Most of the hotels slated to become full-service Hyatts were new-builds in 2009, and are already recognized as market leaders in guest experience and performance.”
The acquisition will enable the company to introduce Hyatt-branded hotels in nine markets where it currently is not represented at all and to establish its extended stay presence in 16 new markets.
In addition to the purchase, LodgeWorks President B. Anthony Isaac will be joining Hyatt as well as other members of the LodgeWords management team.
“Hyatt and LodgeWorks have done business together for a long time and the leadership teams of the companies know and respect each other,” a company spokeswoman said. “This transaction grew out of a series of discussions taking place between the two entities over time. Everyone involved is extremely enthusiastic about the transaction and very excited about what it means for Hyatt and especially for our extended-stay brand.”
Hyatt expects this purchase to generate approximately US$50 million of adjusted EBITDA during 2012.
“Along with managing and franchising, owning hotels is part of our business model, but we do recycle the capital in our owned hotels when appropriate to enable us to invest in the business in a way that drives preference,” the spokeswoman said. “These assets will become part of the recycling planning that we do over time. It’s not unusual in the industry for the branding company to invest capital to support relatively new brands as we have with Hyatt Place and Hyatt Summerfield Suites.”
