CHICAGO—Hyatt Hotels Corporation has entered into an agreement to acquire Two Roads Hospitality, an international lifestyle hotel management company with a collection of distinctive brands, properties and a robust development pipeline around the globe.
Through the addition of Two Roads—comprising Joie de Vivre Hotels, Thompson Hotels, Destination Hotels, tommie and Alila Hotels & Resorts, with more than 85 properties in eight countries—Hyatt will expand its brand presence into 23 new markets while enhancing its offerings in lifestyle hotel experiences and wellbeing. With Two Roads and its distinctive collection of lifestyle hotels, resorts and vacation residences, Hyatt will offer an expanded and more powerful portfolio of brands with best-in-class offerings to deliver compelling experiences and benefits for guests and World of Hyatt members, expand its relationship with valued hotel owners and drive growth for shareholders, according to the company.
“Hyatt and Two Roads share a commitment to genuine care and delivering distinctive experiences to discerning travelers,” said Mark Hoplamazian, president/CEO of Hyatt Hotels Corporation. “We are pleased to be coming together, and are dedicated to learning from each other and taking the best of both organizations forward. Two Roads’ passionate team members, strong brands, global footprint and robust development pipeline will expand our lifestyle offerings and grow Hyatt’s brand presence in more places where our guests and World of Hyatt members want to travel. Importantly, combining Two Roads’ meaningful brand presence and development plans in Asia with Hyatt’s already strong position in this region will allow us to accelerate expansion in this critically important and fast-growing part of the world.”
The acquisition consists of a base purchase price of $480 million, with the potential for Hyatt to invest up to an additional $120 million in the aggregate, contingent on the outcome of certain terms to be individually defined after closing. The base plus contingent total purchase price is expected to reflect an EBITDA multiple of approximately 12-13x stabilized 2021 earnings, which Hyatt considers the best indicator of valuation based on anticipated synergies and growth.
Hotel Business was on scene as Two Roads Hospitality celebrated its expansion at this year’s Travel Industry Advisory Board Forum in Aspen, CO, held at The Gant, a Destination Hotel. Leadership spoke on growth and company culture.
“We’re really a B2B brand,” said Todd Wynne-Parry, EVP of global acquisitions and development for Two Roads Hospitality. “Our growth is strategic, not just for growth’s sake. It’s about finding the right properties with the right partners.”
Consistent with Hyatt’s long-term growth strategy to drive shareholder value, this investment in a high-growth, capital-light platform accelerates Hyatt’s evolution to a more fee-driven enterprise, funded by proceeds from an asset disposition program in which real estate has been monetized at an average multiple of approximately 16.5x EBITDA to date. Notably, Hyatt is making this growth investment in a year in which it has committed to return approximately $800 million of shareholder capital through a combination of share repurchases and a cash dividend.
After the close of the transaction, which is expected later this year, Hyatt will create a dedicated lifestyle division as a catalyst to bring together the operations of Two Roads’ and Hyatt’s lifestyle brands. “Hyatt is an ideal home for us as we share many values and a deep commitment to thoughtful growth and creating compelling experiences for our guests,” said Jamie Sabatier, CEO of Two Roads Hospitality. “Hyatt’s unique position in the marketplace brings with it the powerful benefit of global scale while maintaining meaningful personal relationships with team members, guests and owners.”
Geolo Capital created Two Roads Hospitality together with Lowe Hospitality Group, Inc. “The agreement to sell Two Roads Hospitality is a testament to the success of its brands and its remarkable associates and is a truly exciting and meaningful milestone for Geolo,” said John Pritzker, founding partner/director of Geolo Capital. “In the span of nine years, we’ve had the pleasure to build an extraordinary global lifestyle hospitality company. As co-owner and founder, our first responsibility was to ensure we found the best home for our employees and the dynamic portfolio of hotels we managed around the world. After a thoughtful review, we determined Hyatt would be the best steward of Two Roads and its managed properties. Hyatt is a world-class operator with unparalleled distribution, brand recognition and management structure that will enable Two Roads to further thrive in today’s global market.”
Hyatt plans to integrate Two Roads brands into the World of Hyatt program in 2019, expanding opportunities for World of Hyatt members to earn and redeem points across more leisure-focused stay options and also driving hotel occupancy from a loyal group of travelers who spend more, stay more and book directly.
Goldman Sachs & Co. LLC served as exclusive financial advisor to Hyatt; Moelis & Company LLC served as exclusive financial advisor to Two Roads Hospitality; Latham & Watkins LLP served as legal counsel to Hyatt; Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to Two Roads Hospitality.