CHICAGO (July
14, 2011) – Hyatt
Hotels Corporation (NYSE: H) announced today that one of its wholly
owned subsidiaries has signed an agreement to purchase a portfolio of
assets from LodgeWorks, L.P.,
a private hotel development, ownership and management company, and its
private equity partners. The acquisition includes 24 hotels and related
assets, including management, franchise and intellectual property
rights for an aggregate purchase price of approximately $802 million in
cash. Key members of the LodgeWorks management and development team are
expected to join Hyatt as part of the transaction.
The hotels being purchased are key assets in strategic, high barrier to
entry markets and are currently branded under the Hotel Sierra® (17), AVIA® Hotels (4), Hyatt
Place® (1) and Hyatt
Summerfield Suites® (2) brands. The acquisition will enable the
company to introduce Hyatt-branded hotels in nine markets where it
currently is not represented at all and to establish its extended stay
presence in 16 new markets.
Following the transaction, 16 Hotel Sierra hotels will be branded as
Hyatt Summerfield Suites, increasing the number of hotels in that
portfolio from 38 to 54. Five properties, including the AVIA Hotels,
are expected to be converted to full service Hyatt brands. The brand
affiliations of Hyatt Summerfield Suites and Hyatt Place properties in
the LodgeWorks portfolio will remain unchanged.
The hotels will be managed by Hyatt following the closing of the
transaction, which is anticipated to occur in the third quarter 2011.
The closing is subject to the satisfaction of certain customary closing
conditions. The closings for the majority of the asset purchases are
expected to take place in the third and fourth quarters of 2011. The
purchases of the remaining assets are expected to close by the end of
the first quarter 2012.
“This is a significant expansion of our presence in the United States
and enhances our extended stay representation with a great collection
of high quality hotels,” said Mark S. Hoplamazian, President and Chief
Executive Officer of Hyatt Hotels Corporation. “We know that for Hyatt
Summerfield Suites to become the preferred brand among extended stay
guests, we must increase the number of markets we serve. This
transaction is a noteworthy step in that direction, and will give us an
immediate boost in brand awareness among both guests and potential
third party developers. The extended stay hotels coming into the
portfolio are, on average, four years old – and many have been open
less than two years – making them welcome additions to our brand. Most
of the hotels slated to become full service Hyatts were new-builds in
2009, and are already recognized as market leaders in guest experience
and performance.”
“We are very proud of our hotels and our teams,” said LodgeWorks
founder, Chairman and CEO Rolf E. Ruhfus. “It is exciting to build a
portfolio that brings value to our investors and teams and now to an
industry-leading Hyatt. We respect the Hyatt heritage and culture and
are very pleased to contribute to its growth.”
Industry veteran B. Anthony (Tony) Isaac, President of LodgeWorks, is
expected to join Hyatt, as are other key members of the LodgeWorks
management team, bringing with them significant development and
construction management expertise, extensive extended stay operating
experience, and a broad range of owner and industry relationships.
Steve Haggerty, Executive Vice President and Global Head of Real Estate
and Development for Hyatt, said, “More than just adding hotels to our
portfolio, this transaction deepens and strengthens Hyatt’s overall
select service and extended stay capabilities. We are delighted to
welcome Tony Isaac and members of his team into the Hyatt family and
enthusiastic about enlisting his team’s management and development
expertise in the service of our mission to grow our select service
brands.”
“We have long admired Hyatt as an innovator and an operator,” said
Isaac. “Given the company’s financial and brand strength and the depth
of its commitment to becoming the preferred hospitality brand in each
segment it serves, it’s an exciting time to join forces with the Hyatt
team. With our intimate knowledge of the extended stay industry and as
the original creators of the Summerfield Suites brand, we see the
integration of Hotel Sierra and AVIA into the Hyatt portfolio as a
powerful combination.”
Hyatt does not expect a significant benefit to 2011 full-year Adjusted
EBITDA as result of this purchase, due to the expected timing of the
closings, transaction costs, and the fact that several of the assets
are continuing to ramp up post-opening. However, Hyatt expects this
purchase to generate approximately $50 million of Adjusted EBITDA
during 2012. The annual Adjusted EBITDA of this purchase is expected to
grow in 2013 and beyond as the properties stabilize and the full
benefit of the conversion and re-branding occurs. For our definition of
Adjusted EBITDA and a reconciliation of consolidated Adjusted EBITDA to
EBITDA and a reconciliation of EBITDA to its most directly comparable
GAAP measure, net income attributable to Hyatt Hotels Corporation, see
Part I, Item 2, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Results of Operations” of our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2011.
The hotels that will join the Hyatt Summerfield Suites portfolio (2,354
rooms) are in:
Bellevue,
WA
Branchburg, NJ
Charlotte, NC
Dulles/Sterling, VA
Fishkill, NY
Morrisville/Raleigh, NC
Parsippany, NJ
Rancho Cordova, CA
Redmond, WA
Richmond, VA
San Jose, CA
San Ramon, CA
Santa Clara, CA
Shelton, CT
King of Prussia, PA
Falls Church, VA
The hotels that will become Hyatt hotels (741 rooms) are in:
Green Bay, WI
Long Beach, CA
Napa, CA
Savannah, GA
Woodlands, TX
The hotels that are already Hyatt-branded (432 rooms) that Hyatt will
acquire and begin managing are:
Hyatt Place Madison/Downtown (WI)
Hyatt Summerfield Suites Boston/Burlington
Hyatt Summerfield Suites Philadelphia/Plymouth Meeting
About Hyatt Hotels Corporation
Hyatt Hotels Corporation, headquartered in Chicago, is a leading global
hospitality company with a proud heritage of making guests feel more
than welcome. Thousands of members of the Hyatt family strive to make a
difference in the lives of the guests they encounter every day by
providing authentic hospitality. The Company’s subsidiaries manage,
franchise, own and develop hotels and resorts under the Hyatt®,
Park Hyatt®, Andaz®, Grand Hyatt®, Hyatt Regency®,
Hyatt Place® and Hyatt Summerfield Suites® brand names and have
locations on six continents. Hyatt Residential Group, Inc., a Hyatt
Hotels Corporation subsidiary, develops, operates, markets or licenses
Hyatt ResidencesTM and Hyatt Vacation Club®, which is changing its
name to Hyatt Residence ClubTM. As of March 31, 2011, the Company’s
worldwide portfolio consisted of 451 properties in 43 countries. For
more information, please visit www.hyatt.com.
About LodgeWorks
Wichita-Kansas based LodgeWorks, L.P., is a privately-held hotel
management and development company with a proven track record as
hospitality brand innovators, having developed 5 hotel brands with
industry-leading guest satisfaction, with sophisticated development
acumen resulting in more than120 hotel projects at a development cost
of $2 billion and an experienced team
that has successfully collaborated for more than 25 years. Among recent
developments, the company launched AVIA®, a boutique hotel
collection with sophisticated, locally-inspired designs, crafted to
bring authentic moments of discovery to discerning travelers.
LodgeWorks also evolved the upscale suite category with Hotel
Sierra®. The brand offers both business and leisure travelers a
contemporary retreat for short or lengthy stays coupled with intuitive,
value-added amenities; smart, fashion-forward design; and unsurpassed
service. For more information, please visit www.lodgeworks.com,
www.aviahotels.com or www.hotel-sierra.com.
Forward-Looking Statements
Statements in this press release, which are not historical facts, are
“forward-looking” statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements include
statements about our plans, strategies, financial performance,
prospects or future events and involve known and unknown risks that are
difficult to predict. As a result, our actual results, performance or
achievements may differ materially from those expressed or implied by
these forward-looking statements. In some cases, you can identify
forward-looking statements by the use of words such as “may,” “could,”
“expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” “continue,” “likely,” “will,”
“would” and variations of these terms and similar expressions, or the
negative of these terms or similar expressions. Such forward-looking
statements are necessarily based upon estimates and assumptions that,
while considered reasonable by us and our management, are inherently
uncertain. Factors that may cause actual results to differ materially
from current expectations include, among others, our ability to
successfully re-brand and integrate certain of the acquired hotels into
our hotel portfolio; the time and capital expenditures required to ramp
up certain of the acquired hotels post-closing; our ability to close
the transaction within the time periods contemplated by the purchase
agreement; the rate and pace of economic recovery following the
economic downturn; levels of spending in business and leisure segments
as well as consumer confidence; declines in occupancy and average daily
rate; hostilities, including future terrorist attacks, or fear of
hostilities that affect travel; travel-related accidents; changes in
the tastes and preferences of our customers; relationships with
associates and labor unions and changes in labor law; the financial
condition of, and our relationships with, third-party property owners,
franchisees and hospitality venture partners; risk associated with
potential acquisitions and dispositions and the introduction of new
brand concepts; changes in the competitive environment in our industry
and the markets where we operate; outcomes of legal proceedings;
changes in federal, state, local or foreign tax law; fluctuations in
currency exchange rates; general volatility of the capital markets and
our ability to access the capital markets. A more complete description
of these risks and uncertainties can be found in our filings with the
U.S. Securities and Exchange Commission, including our Annual Report on
Form 10-K. We caution you not to place undue reliance on any
forward-looking statements, which are made as of the date of this press
release. We undertake no obligation to update publicly any of these
forward-looking statements to reflect actual results, new information
or future events, changes in assumptions or changes in other factors
affecting forward-looking statements, except to the extent required by
applicable laws. If we update one or more forward-looking statements,
no inference should be drawn that we will make additional updates with
respect to those or other forward-looking statements.