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Hyatt (H) to Acquire Two Roads Hospitality, Expands Portfolio

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Hyatt Hotels Corporation (H - Free Report) has reached an agreement to acquire Two Roads Hospitality — an international lifestyle company. The base price of the deal stands at $480 million. Hyatt can invest as much as $120 million in Two Roads Hospitality, following the closure of the deal in the later part of 2018.

As of Jun 30, 2018, Hyatt had a portfolio of 14 premier brands and 750 properties in more than 55 countries. Following the acquisition of Two Roads Hospitality, the company will not only add 85 properties to its existing portfolio but will also expands its footprint in 23 new markets. This lifestyle company has strong development pipeline as well.

Hyatt stated that the value of the deal being $600 million, including both base price and contingent price, is likely to reflect EBITDA multiple of nearly 12-13x stabilized 2021 earnings. The company will form a lifestyle division, which will include Two Roads’ and Hyatt’s lifestyle brands.

Focus on High-End Travelers

Of late, Hyatt has been expanding its portfolio beyond traditional hotel stays . With the demand for wellness offerings rising among high-end travelers, the acquisition of Two Roads Hospitality should further strengthen its position in the wellness category. Meanwhile, the company remains committed to a holistic health and wellness strategy as many of its hotels worldwide are offering healthy refreshments at arrival, curated in-room amenities, increased fitness offerings, extended menus and nutritious to-go substitutes. Per Hyatt, the company’s position in Asia will be stronger with this acquisition.

Hyatt plans to include Two Roads brands into the World of Hyatt program in 2019. Notably, World of Hyatt is a platform for guest engagement. The company is witnessing a higher level of guest satisfaction owing to the enhancements. As of Dec 31, 2017, the loyalty program had over 10 million active members.

In an effort to expand its wellness category, the company has already acquired Miraval Group — a distinguished provider of wellness and mindfulness experiences — in 2017. Moreover, Hyatt is increasing its focus on private accommodations, another fast-growing travel segment, which has the potential to extend the Hyatt brand beyond traditional hotel space.

Driven by its global brand presence, shares of Hyatt have gained 23.9% in a year against the industry’s 8.5% decline.

 

Zacks Rank & Stocks to Consider

Hyatt currently has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Red Lion Hotels Corporation , Peak Resorts, Inc. and Wyndham Destinations, Inc. . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Red Lion Hotels have gained 26% in the past six months.

Peak Resorts earnings in the current year is likely to grow by 39.6%.

Wyndham Destinations delivered positive earnings surprise in the trailing four quarter, with an average of 5.2%.

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