This asset-light acquisition will include a portfolio of 12 managed or franchised lifestyle hotels, with another 24 signed long-term management agreements for hotels expected to open in the future. Upon closing, this expansion will add more than 1,700 rooms to Hyatt’s lifestyle portfolio and increase Hyatt’s room count in New York City by more than 30%. This acquisition continues Hyatt’s asset-light growth strategy following its transactions to acquire Two Roads Hospitality in 2018 and Apple Leisure Group in 2021—and, most recently, Hyatt’s collaboration agreement with German Lindner Hotels AG, to further grow Hyatt’s brand footprint in Europe.
Upon closing, Hyatt will pay a base purchase price of $125 million, with up to an additional $175 million over the next six years as properties come into the pipeline and open. Stabilized management fees associated with the base purchase price of $125 million are anticipated to be approximately $12 million and, to the extent the contingent purchase price of $175 million is paid, additional stabilized management fees are anticipated to be up to approximately $27 million. The total base purchase price plus the contingent purchase price represents an attractive acquisition multiple in the high-single digits on projected stabilized earnings, the companies report.
The acquisition will extend Hyatt’s brand footprint in key markets, including Nashville, Hollywood, South Beach, Durham, several locations in New York City and one in the Catskills. Signed contracts represent additional strategic destinations including Las Vegas, Saint Lucia and Doha.
“We have tremendous respect for what Dream Hotel Group founder [and chairman] Sant Singh Chatwal and CEO Jay Stein and their team have created and are grateful for the trust being placed in us by Dream Hotel Group to care for their brands and carry their success forward into the future,” said Mark Hoplamazian, president/CEO, Hyatt. “We look forward to continuing our growth journey with more than 600 new Hyatt family members who will further elevate our lifestyle expertise and expand the success of our dedicated lifestyle division. We are excited to offer even more inspiring experiences and celebratory programming to our guests and loyalty members and bring the value of the Hyatt network to a growing number of discerning hotel owners and developers around the world.”
Chatwal added, “Hyatt has a proven track record of preserving what makes lifestyle hotels special and is the ideal new home for our growing Dream Hotel Group brands. As an owner of Dream Hotel Group properties, I look forward to the next part of our journey and am confident there is a bright future ahead for our hotels, owners, guests and team members as part of the Hyatt family.”
The transaction is anticipated to close in the coming months, subject to customary closing conditions. Chatwal will continue his commitment as an owner of four open and two future hotels that are expected to join the Hyatt portfolio. Stein will join Hyatt as head of Dream Hotels to guide the integration of the Dream Hotel Group brands into the Hyatt portfolio, ensuring the “unique DNA of each brand is preserved while leveraging Hyatt’s capabilities to optimize property performance,” according to the company. Additionally, Dream Hotel Group’s Chief Development Officer David Kuperberg will join Hyatt as head of development, Dream Hotels; COO Michael Lindenbaum will join Hyatt as global head of operations, Dream Hotels.
In connection with the transaction, Moelis & Company LLC served as financial advisor to Hyatt and Latham & Watkins LLP acted as its legal advisor.
Tags: David Kuperberg, Dream Hotel Group, Dream Hotels, Hyatt Hotel Corporation, Jay Stein, Latham & Watkins LLP, Michael Lindenbaum, Moelis & Company LLC, Sant Singh Chatwal, The Chatwal Hotels, Unscripted Hotels
