Hyatt Continues Asset-Light Growth Strategy with Plans to Acquire Dream Hotel Group

Hyatt Hotels Corporation (NYSE: H) and Dream Hotel Group announced an agreement for a Hyatt affiliate to acquire Dream Hotel Group’s lifestyle hotel brand and management platform including the Dream Hotels, The Chatwal Hotels and Unscripted Hotels brands, with properties in some of the world’s most prominent hotel markets across the Americas, Europe and Asia.

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Dream Downtown (Photo: Business Wire)

This asset-light acquisition will include a portfolio of 12 managed or franchised lifestyle hotels, with another 24 signed long-term management agreements for hotels expected to open in the future. Upon closing, this expansion will add over 1,700 rooms to Hyatt’s lifestyle portfolio and increase Hyatt’s room count in New York City by more than 30%. This acquisition continues Hyatt’s asset-light growth strategy following its transactions to acquire Two Roads Hospitality in 2018 and Apple Leisure Group in 2021 – and, most recently, Hyatt’s collaboration agreement with German Lindner Hotels AG, to further grow Hyatt’s brand footprint in Europe.

Upon closing, Hyatt will pay a base purchase price of $125 million, with up to an additional $175 million over the next six years as properties come into the pipeline and open. Stabilized management fees associated with the base purchase price of $125 million are anticipated to be approximately $12 million and, to the extent the contingent purchase price of $175 million is paid, additional stabilized management fees are anticipated to be up to approximately $27 million. The total base purchase price plus the contingent purchase price represents an attractive acquisition multiple in the high-single digits on projected stabilized earnings.

Dream Hotel Group properties are known for their vibrant dining and nightlife experiences including hotspot restaurants, lavish entertainment venues and exclusive night clubs built on strategic collaborations with innovative and award-winning industry leaders. The acquisition will extend Hyatt’s brand footprint in key markets, including Nashville, Hollywood, South Beach, Durham, several locations in New York City and one in the Catskills. Signed contracts represent additional strategic destinations including Las Vegas, Saint Lucia and Doha.