Hyatt Hotels said on Monday it would acquire Playa Hotels & Resorts in a deal valued at $2.6 billion, marking a significant expansion of its all-inclusive resort portfolio in the Caribbean and Mexico.

Hyatt is gaining additional operational expertise in the all-inclusive space and instant scale in resort hotspots in the Caribbean and Mexico, where development opportunities are limited.

Hyatt invested in Playa for over a decade and had a 9.4% stake before this deal. Hyatt will pay $13.50 per share for the remaining shares.

"We have respected and benefitted from Playa’s operating expertise and outstanding guest experience delivery for years through their ownership and management of eight of our Hyatt Ziva and Hyatt Zilara hotels," said Hyatt CEO Mark Hoplamazian in a statement.

By the Numbers

• The deal includes debt, net of cash, and valued Playa at about a 40% premium to its market capitalization as of December 20, the day before the companies revealed they were in talks.

• Properties added to Hyatt's portfolio: 24 resorts

What's Next

• The companies expect the transaction to close later this year.

• Hyatt said it plans to sell off select real estate assets while maintaining management contracts. The hotel group wants to remain an asset-light company, while Playa owns some of its resorts. Hyatt plans to sell these by 2027 for an expected value of "at least $2 billion."

• In a report, analysts at Truist Securities estimated that after asset sales, Hyatt could earn about $20 million a year in management/franchise fees.

• Expect non-Hyatt branded Playa properties to be converted to Hyatt brands. Hyatt already had a partnership to run and market a few Playa properties under its Ziva and Zilara brands. Now, it will have greater control over those brands.

• As Truist analysts noted, Hyatt would be better positioned as a larger company to handle the regional volatility that has challenged Playa, such as hurricanes.

The Big Picture

The premium luxury all-inclusive resort market has been a rapidly growing segment of the hospitality industry, and high-end travelers have seen increasing demand post-pandemic.

Industry analysts see the deal as part of a broader consolidation trend in all-inclusive resorts, as major hotel chains seek to offer more points redemption opportunities to road warriors using their loyalty programs.

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