Hyatt Hotels Corp. announced on Friday that a wholly owned Hyatt subsidiary is set to enter the all-inclusive segment with an investment of US$325 million in Playa Hotels & Resorts, consisting of US$100 million for an approximate 20% ownership stake in Playa and US$225 million for convertible preferred stock in Playa.
Under an agreement with Hyatt Hotels Corp, Chicago, Playa will pursue the acquisition or development of new all-inclusive resort opportunities under Hyatt’s brands and it will also have certain rights to operate Hyatt-branded all-inclusive resorts in five Latin American and Caribbean countries on an exclusive basis through 2018. Playa’s hotel portfolio will include 13 resorts totaling approximately 5,800 guestrooms in the Dominican Republic, Mexico and Jamaica.
In connection with the Hyatt investment, Playa Hotels & Resorts, Fairfax, Virginia, will enter into franchise agreements with Hyatt for six of the 13 resorts, or approximately 2,800 guestrooms, which will operate under Hyatt brands following the completion of significant renovations.
“The all-inclusive segment has grown rapidly over the past 20 years,” said Stephen Haggerty, global head, real estate and capital strategy for Hyatt. “This transaction will position us to introduce Hyatt’s authentic hospitality to a new guest base, while offering great new resort options in sought-after destinations to our existing guests. Our agreement with Playa also provides us with a platform for future global growth in an attractive segment, and our investment is structured to generate strong returns through our common and preferred interests as well as recurring franchise fees.”
The first two Hyatt-branded all-inclusive resorts, located in Mexico, will be introduced later this year following multimillion-dollar renovations of existing properties. Four additional Hyatt-branded resorts in Jamaica, Mexico and the Dominican Republic are expected to be introduced in 2014 and 2015.
The investment is expected to occur during the third quarter of 2013 and is subject to closing conditions.