MW Hyatt likely to flip Playa resort properties with its 'asset-light' play book: analyst

By Steve Gelsi

Wall Street expects Hyatt to sell hotel properties in the Caribbean, Mexico and Jamaica soon after closing Playa deal

Hyatt Hotels is in talks to spend around $1.5 billion to buy publicly-traded Playa Hotels, but will likely sell them as part of its asset-light business model.

Playa Hotels $(PLYA)$ stock was down 2% in premarket trading on Tuesday.

Shares cooled off from a 28% rally in the previous session to close at $12.35 a share, after it announced exclusive deal talks with larger rival Hyatt Hotels Corp. $(HKPD)$.

Truist Securities analyst C. Patrick Scholes reiterated a buy rating on Playa Hotels and said the company's search for a buyer is not a big surprise due to management's vocal complaints about the hotel operator's undervalued share price.

He reiterated his price target of $13 a share for Playa Hotels stock and said a tie-up with Hyatt appears likely.

Hyatt $(H)$ already owns about 10% of Playa's stock as well as the brands of Playa's highly-rated Ziva and Zilara all-inclusive hotels.

"It comes as no surprise to use that PLYA is an interested seller," Truist analyst Scholes said in a research note. "On the other hand, we had always thought that a private buyer such as a high net worth family would be the most likely buyer."

In its deal-talk announcement on Monday, Hyatt said, "We will continue to map out a clear path for an asset-light outcome for any strategic alternatives we undertake."

Truist analyst Scholes said it's likely Hyatt would move quickly to sell Playa's properties after the deal closes.

"We see their course of action being converting the all-inclusive hotels that are not currently Hyatt branded to a Hyatt brand and then selling-off the real estate," Scholes said. "We speculate the real estate could be sold-off over time or possibly via a pre-arranged sale concurrent with the possible acquisition of PLYA."

Playa Hotels owns properties on the Pacific Coast, Yucatán Peninsula, Jamaica and Dominican Republic in locales such as Puerto Vallarta, Los Cabos and Montego Bay.

-Steve Gelsi

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December 24, 2024 08:32 ET (13:32 GMT)

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