Hyatt Hotels Corporation Class A (H.US) acquires Playa (PLYA.US) for $2.6 billion, expanding into all-inclusive resorts with a strong presence.

Hyatt Hotels Corporation Class A announced that it will acquire Playa Hotels & Resorts for approximately $2.6 billion, including assuming around $900 million of its debt. The acquisition aims to enhance Hyatt's all-inclusive resort business in Mexico, Jamaica, and the Dominican Republic. Hyatt has offered $13.50 per share for Playa, a 40.5% premium over the closing price on December 20 (the last trading day before the start of negotiations). After the acquisition, Hyatt plans to sell Playa's owned properties to third-party buyers, expecting to generate at least $2 billion in proceeds from the asset sales by 2027. Hyatt currently holds 9.4% of Playa's shares and this acquisition will give them full control over Playa's resort business. According to analyst David Katz from Jefferies Financial Group Inc., Hyatt's strategy of selling owned real estate and retaining hotel management contracts is expected to create significant value. However, this process will take time and incur additional costs. While regulatory approvals are not expected to be overly complex, there is still some uncertainty regarding the transaction process and completion timeline. This acquisition is part of Hyatt's ongoing growth in the all-inclusive resort sector, following their acquisition of Apple Leisure Group in 2021 and the establishment of a joint venture with Grupo Piero in 2024 to incorporate Bahia Principe Hotels & Resorts into Hyatt's Inclusive Collection. Hyatt plans to fully finance this acquisition through new debt financing and expects to repay over 80% of the new debt through asset sales to maintain its investment-grade rating. Hyatt also plans to sell off some assets in the coming years with a target of generating at least $2 billion in revenue by the end of 2027 through these asset sales. They anticipate that more than 90% of their revenues will come from their light asset model after these asset sales. Playa operates 24 upscale all-inclusive resorts in Mexico, Jamaica, and the Dominican Republic. Their portfolio also includes resort projects in cooperation with Hilton Worldwide Holdings Inc, Marriott International, Wyndham Hotels & Resorts, and InterContinental Hotels Group's Kimpton brand. Truist Securities downgraded their rating on Playa from 'Buy' to 'Hold' with a target price of $13.00, in light of the potential acquisition by Hyatt. Truist Securities believes that Playa's current stock price is close to its intrinsic value. Analyst Patrick Scholes from Truist Securities noted that it remains unclear if Hyatt will be able to convert non-Hyatt branded hotels into Hyatt Hotels Corporation Class A properties if they choose to sell these hotels. Additionally, while analysts do not anticipate a complex regulatory process, there is still some uncertainty surrounding the completion timeline of the transaction.