Discussing Apple deal, Hyatt's CEO highlights the strength of leisure travel

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T0823ZOETRYPARAISO_C_HR [Credit: Apple Leisure Group]
The Zoetry Paraiso del la Bonita in Riviera Maya, Mexico. Photo Credit: Apple Leisure Group

In a Monday call with investors, Hyatt CEO Mark Hoplamazian shed more light on the company's blockbuster deal to acquire Apple Leisure Group (ALG), which Hoplamazian asserted will catapult Hyatt to the world's top operator of luxury all-inclusive resorts in terms of room count. 

The centerpiece of the $2.7 billion transaction is AMResorts, ALG's resort-management arm. AMResorts oversees a 102-property portfolio spanning more than 33,000 guestrooms in 10 countries. 

With the addition of AMResorts, Hyatt said it will derive more than 50% of its room revenue from leisure travel by 2023.

In 2019, more than 12 million guests stayed at AMResorts properties, said Hoplamazian. Its resorts include the four- and five-star Secrets, Dreams, Breathless, Zoetry, Alua and Sunscape brands.

"We are very bullish on leisure travel," Hoplamazian said. "It's proven its resiliency and durability. We're excited about luxury in particular, because we expect the global luxury travel market to grow at about 11% from 2021 to 2027."

The acquisition will increase Hyatt's Europe presence by 60%, giving Hyatt a foothold in popular resort destinations in the Greek islands, coastal Spain and the Balearic and Canary islands.

Hoplamazian touted further expansion opportunities, citing a robust AMResorts pipeline of 24 fully financed projects as well as 40 additional deals "in advanced stages of negotiation."

"In particular, we see incredible opportunity with luxury resorts in Southern Europe, a region where branded resorts are only 2% of total rooms, versus 10% for Mexico and Caribbean, and in all-inclusive resorts in new markets in Europe, the Middle East and Asia, regions where this concept has not yet satisfied growing demand," he said.

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Hoplamazian said the company would explore synergies between the World of Hyatt loyalty platform and ALG's Unlimited Vacation Club membership program. The latter has some 110,000 active members.

Opportunities in packaged travel

He also hinted at "immediate opportunities" within ALG's vacations business, which includes packaged-travel brands Apple Vacations, Funjet Vacations, Blue Sky Tours Hawaii, Travel Impressions, CheapCaribbean and BeachBound, as well as Mexico and Caribbean-focused destination-management company Amstar. 

"Packaging sounds trivial, but it's actually very complex," said Hoplamazian. "And with the Mark Travel acquisition, [ALG] gained a very powerful platform for packaging, something that we recognize as something that can be leveraged for other Hyatt-branded resorts and hotels. The second dimension is that the Amstar business is very experienced in working with providers of on-the-ground experiences in different markets. And we see an opportunity to bring those experiences to travelers at other Hyatt resorts."

In 2019, ALG's vacations arm booked travel for approximately 3.1 million passengers. 

Meanwhile, Hoplamazian emphasized that following completion of the acquisition, ALG will operate as a separate unit, with the entire ALG team to remain intact. Alejandro Reynal, ALG's CEO and president, will report directly to Hoplamazian and will join Hyatt's executive team. 

"The company will largely look the same way as it does now after we close," said Hoplamazian. "[We recognize] that this is a different business than our core hotel operating platform, primarily because the all-inclusive management base includes a very different distribution channel profile than ours does. We learned this from our prior experience with Hyatt Ziva and Zilara, and we have a tremendous respect for that."

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