Hyatt is well on the way to becoming another asset-light hotel company having committed to another $2 billion worth of asset sales by 2024 last August.
Earlier this year the company said it closed deals worth $812 million but changes in the macroeconomic environment could make things tougher for them in the future.
On a conference call after the release of Hyatt’s Q2 results, CEO Mark Hoplamazian was asked about the current transactional environment and he gave some pretty revealing answers about how things stand.
Asked about the difference between now and six months ago, Hoplamazian said: “I think the primary difference over that period of time has to do with rates and availability of debt for acquisitions. And that has a greater impact on private equity than it does on other types of buyers. I would say that we have discovered that, that can work in favor of all cash buyers.”
Hoplamazian actually gave the example of Hyatt acting as a buyer with the purchase of the Hotel Irvine in California.
“I think that was the difference maker in being able to secure that hotel at what we think is a very compelling value. But the certainty of closing was 100% because we were a cash buyer,” he said.
Hoplamazian went on to say that “interest rates at this or higher levels and availability at lower levels” might remove “a chunk of the buyer universe that needs significant leverage to make their numbers work”.
But he remains confident that Hyatt will hit its disposal target.
“We have a number of unique assets remaining in our portfolio of significant value, things like the Hyatt Regency in Orlando, which is really a very uniquely positioned, very high-performing hotel in the midst of the Orange County Convention Center. We have our trophy assets in Europe, and the Miraval portfolio, all of which continue to perform exceedingly well," he said.
“And the buyer universe for a number of those properties is not really what I would consider the market. So we don't have any particular concerns. We're 1000% confident we will get to and probably exceed the $2 billion goal that we set for the end of '24.”
Hyatt bought Apple Leisure Group for $2.7 billion last year.
Recent asset sales
- Hyatt Regency Indian Wells Resort & Spa — sold for approximately $145 million.
- Grand Hyatt San Antonio River Walk — sold for approximately $310 million.
- The Driskill — sold for approximately $125 million.
- The Confidante Miami Beach — sold for approximately $232 million.
Q2 results at a glance
- Hyatt swung from a loss of $9 million to a profit of $206 million
- RevPAR increased 82% to $130.16
- Net Rooms Growth was 19%, excluding Apple Leisure Group (ALG) it was 4.6%
- Pipeline of executed management or franchise contracts was approximately 113,000 rooms. Excluding ALG, it was approximately 106,000 rooms.