By: Helena Bhattacharya, Rohan Samra, Kush Mahawar (University of Oxford); Hisha Tharmarajah, Diana Usova, Martin Atkinson (University of Bristol)
Photo: Christian Lambert (Unsplash)
Overview of the deal
Acquirer: Hyatt Hotel Corporation (NYSE: H)
Target: Playa Hotels & Resorts (NASDAQ:PLYA)
Implied Equity Value: $2.6 billion
Total Transaction Size: $2.7 billion
Closed Date: Q42025 - subject to shareholder and regulatory approval
Target Advisor: BDT & MSD Partners (Lead Financial Advisor), Latham and Watkins LLP (Legal Advisor)
Acquirer advisor: PJT Partners LP (Lead Financial Advisor), Hogan Lovells and NautaDutilh (Legal Advisor)
Both operating within the all-inclusive resort sector, on the 10th of February 2025, Hyatt Hotels Corporation (Hyatt hereafter) announced an agreement to acquire all outstanding shares of Playa Hotels and Resorts (Playa hereafter). The intention behind the acquisition is to drive the value creation of Playa through their complementing business segments of luxury hotel resorts and expand Hyatt’s distribution channels, offering further benefits to all guests. Moreover, it aims to further optimise existing infrastructure in the emerging market, Mexico, as well as the Caribbean, in which Hyatt has had experience in developing a presence through its precedent transaction with Bahia Principe Hotels & Resorts. Playa has stated the acquisition will create a 40% premium on the unaffected share price prior to the announcement for current shareholders.
The terms of the agreement indicate Hyatt will purchase all outstanding shares of Playa at $13.50, in addition to $900 million in debt. Set to be financed through short-term loans and senior unsecured notes, Hyatt expects to gain at least $2 billion from the sale of assets ambitiously in just over the next year and a half. Consequently, from this transaction Hyatt is forecasted to increase its EBITDA to 38% in 2027 from currently 33%.
The acquisition is set to close in the latter part of this year, subject to regulatory and shareholder approval.
"The combination of Playa's premier beachfront luxury properties, our exceptional resort staff's Service from the Heart, and Hyatt's world-class brand and operational excellence has redefined the all-inclusive experience for discerning travellers." - Bruce D. Wardinski, Chairman and CEO of Playa Hotels & Resorts
Company Details (Acquirer - Hyatt Hotels Corporation)
Hyatt Hotels Corporation is a global hospitality company operating in the hotel and resort industry. It owns, manages, franchises, and develops luxury and business hotels, resorts, and vacation properties under brands like Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, and more. The company focuses on delivering exceptional service and experiences to leisure and business travellers worldwide.
Founded in 1957, headquartered in: Chicago, Illinois (USA)
CEO: Mark S. Hoplamazian
Number of employees: ~130,000
Market Cap: $11.95 billion (as of 25/03/2025)
Enterprise Value (EV): $14.44 billion
LTM Revenue: $3.3 billion
LTM EBITDA: $749 million
LTM EV/Revenue: 2.17x
LTM EV/EBITDA: 6.84x
Recent Transactions: in late 2024, Hyatt completed the acquisition of Standard International, adding The Standard and Bunkhouse brands to its portfolio. It also acquired the Me and All Hotels brand, expanding its presence in Germany’s lifestyle hotel market.
Company Details (Target - Playa Hotels & Resorts )
Playa Hotels & Resorts is a hospitality company specializing in luxury all-inclusive beachfront resorts. The company primarily operates across Mexico, the Caribbean, and Latin America. Playa offers guests a fully inclusive vacation experience and focuses on leisure travellers, families, and couples seeking hassle-free getaways, while also catering to weddings and corporate events.
Founded in 2006, headquartered in Fairfax, Virginia (USA)
CEO: Bruce D. Wardinski
Number of employees: 12,200
Market cap: $1.51 billion
Enterprise Value (EV): $2.33 billion
LTM Revenue: (Full 2024) $938.57 million
LTM EBITDA: $248.71 million
LTM EV/Revenue: 2.48
LTM EV/EBITDA: 9.33
Projections and Assumptions
Short-Term Consequences
On February 10, Hyatt announced that it would buy Playa for about $2.6bn, including ~$900m in debt, net of cash. Hyatt will acquire all outstanding shares of Playa for $13.50 per share, representing a 40.5% premium to the stock’s close on December 20, before the companies announced their deal talks. Following the terms announcement, Playa’s shares rose 2%, while Hyatt’s stock price was flat. Hyatt, which owns a 9.4% stake in Playa, anticipates the acquisition to close later this year, subject to Playa shareholder and regulatory approval.
Playa currently owns and/or manages 24 high-end, all-inclusive resorts across Mexico, Jamaica, and the Dominican Republic. Playa’s portfolio includes resorts for Hyatt rivals, such as Hilton Worldwide, Marriott International, and Wyndham. It is unclear if Hyatt will be able to terminate or rebrand these competitor-branded resorts.
Hyatt remains committed to its asset-light business model, where the operator prefers not to own physical properties but to manage or franchise them. As a result, Hyatt intends to identify third-party buyers for Playa-owned properties. Hyatt anticipates realising at least $2bn of proceeds from asset sales by the end of 2027.
Hyatt expects to fund 100% of the acquisition with new debt financing, and, consistent with maintaining its investment-grade profile, Hyatt expects to pay down over 80% of the new debt financing with proceeds from asset sales. On March 17, Hyatt sold $1bn of bonds, featuring both three-year and seven-year fixed-rate investment-grade bonds, to finance the pending deal. This dual-tranche approach allows the hospitality giant to attract a wider range of investors with varying risk appetites and investment horizons.
Long-Term Upsides
The long-term benefits of Hyatt’s acquisition of Playa will be to cement Hyatt as an industry leader in the all-inclusive resort sector.
The acquisition will allow Hyatt to continue diversifying both operationally and geographically. It will add a significant number of all-inclusive resorts to Hyatt’s portfolio, positioning Hyatt well to capitalise on evolving consumer preferences within the space. This follows Hyatt’s recent spree of acquisition activity in the all-inclusive industry. Hyatt currently has 55,000 all-inclusive rooms across Latin America, the Caribbean and Europe. A further upside for Hyatt will be the ability to secure long-term management agreements for the luxury all-inclusive Hyatt Ziva and Hyatt Zilara brands. As part of a long-standing partnership, Playa had been operating the majority of these Caribbean properties. On Playa’s other properties, it is also likely Hyatt will be able to secure some form of management or franchise fee upon sale of the asset.
Geographically, the acquisition will also allow Hyatt to add to its portfolio in Mexico and the Caribbean. These are areas where it previously had limited exposure. The acquisition will also expand Hyatt’s distribution channels, including ALG Vacations and Unlimited Vacation Club, to Playa’s portfolio. Potential synergies may also be realised with regard to reduced SG&A and more efficient marketing spend.
Risks and Uncertainties
Although Hyatt’s acquisition of Playa presents many strategic opportunities for growth and diversification, there are clear risks with the transaction.
Hyatt maintains an asset-light business model, preferring to manage and franchise physical properties instead of owning them. Having acquired Playa’s owned properties, Hyatt expects to gain at least $2 billion from selling these assets by 2027. However, identifying third-party buyers and retaining management contracts will pose logistical challenges, requiring time, incremental cost and modest risk. Sales will rely on stable macroeconomic conditions and investor interest. Moreover, Playa’s portfolio also comprises resorts for key competitors such as Hilton and Marriott. It remains uncertain as to whether or not Hyatt would seek to bring these hotels under its network upon sale of the properties. There are further questions as to how it would go about doing this, especially given that existing agreements will have to be honoured.
Another potential concern stems from Hyatt’s aggressive growth in recent years. In 2021, Hyatt acquired the Apple Leisure Group, bringing several all-inclusive brands under its name. In 2024, it pursued a joint venture with Grupo Pinero. It also established Hyatt Vivid, as well as targeting rapid growth in Europe to further expand its all-inclusive offering. Though Hyatt has established itself as a leader in the all-inclusive space, such rapid growth risks global overstretch. The key question will be whether or not Hyatt can continue to successfully meet its product offering.