Hyatt Hotels Corporation said it paid US$465 million to acquire a 50 per cent stake in Management Hotelero Piñero, S.L., a joint venture with Grupo Piñero, as part of its expansion into the all-inclusive segment.

This was revealed in Hyatt’s 10-K filing (annual report) published last Thursday. Hyatt paid €359 million or US$374 million on December 27 to acquire its interest in the joint venture which owns the Bahia Principe brand and manages the 22 Bahia Principe Hotels & Resorts-branded properties across the Dominican Republic, Spain, Mexico and Jamaica. There was €60 million or US$91 million in deferred considerations related to the transaction, with US$33 million contingent on the development of additional hotels to be managed by the joint venture in the future. That amount would be paid up to 2034.

Encarna Piñero will chair the board of the joint venture, Bahia Principe CEO Julio Pérez will lead the entity, while Izet Mahalbasic will be the chief financial officer of the entity to be headquartered in Palma de Mallorca, Spain. Hyatt will provide certain commercial and management support services to the joint venture to support the growth of the Bahia Principe brand.

While the financial performance of the joint venture was not mentioned in the 10-K, it was revealed that Bahia Principe brand name was valued at US$84 million and that the management and hotel service agreements were valued at US$433 million. Overall, Hyatt recorded US$921 million in assets, US$179 million in liabilities and US$465 million in net assets attributed to Hyatt shareholders.

The move by Hyatt to form this joint venture with Grupo Piñero complements its strategy of growing its portfolio in the high-end, all-inclusive resorts which are dominated by families from the Dominican Republic, Mexico and Spain. Hyatt acquired the Secrets, Zoëtry and Sunscape Resorts & Spas portfolios in November 2021 when it spent US$2.7 billion to acquire the Apple Leisure Group (ALG) and the AMResorts collection. It also announced on February 10 that it would be acquiring Playa Hotels & Resorts N.V. for US$2.6 billion with Hyatt to pay US$1.60 billion in cash to Playa shareholders based on a US$13.50 share price.

“The model is very, very attractive. It’s more predictable, higher margin, higher free cash flow and the durability of the model has been proven, and the yields are higher so for investors. So, there has been and there continues to be an increasing elevated level of inbound interest institutional capital into the market,” stated Mark Hoplamazian, president and chief executive officer of Hyatt, in the company’s earnings call on February 13.

The Hyatt CEO also added, “So, we feel like we are at that inflection point. We’ve already had a few transactions that aggregate to probably maybe just under $1 billion worth of assets that have been, that have traded hands that involve institutional capital from the United States. And so, we feel like the ice has been broken, so to speak, and we’re optimistic that we’ll see more and more investment in these kinds of assets going forward because they’re so attractive.”

Hyatt’s move to deepen its all-inclusive portfolio comes at a time when Jamaica is developing over 10,000 new hotel rooms along the north coast. Most of these resorts are geared towards the all-inclusive resort model which is the predominant structure in the Jamaican tourism market. Hyatt already had three direct resorts in Jamaica from the ALG acquisition, added another two from the Grupo Piñero deal and will add an extra four resorts when it completes the Playa deal. Hyatt intends to have Playa sell the real estate for its proprietary resorts to third parties over the next two years as it transitions the business to an asset-light model.

Hyatt currently has over 55,000 rooms across Latin America, the Caribbean and Europe under its all-inclusive model. According to its earnings release, its system-wide all-inclusive resorts in the Americas (excluding the United States of America) US$277.53 in net package RevPAR (revenue per available room), US$379.91 for the net package ADR (average daily rate) and 73.1 per cent average occupancy in 2024. The Dreams Resorts & Spa’s had a net package RevPAR of US$219.10 while the Secrets Resorts & Spas had a net package RevPAR of US$291.17. The net package ADR is a metric used by hotels to attain the average room price attained by a hotel and is calculated using the net package revenues divided by the number of rooms sold in the period. The package RevPAR is calculated by multiplying the net package ADR and the average daily occupancy percentage figure.

Despite the laser focus strategy by Hyatt, its fourth quarter did not live up to Wall Street’s expectations. Hyatt generated US$1.60 billion in revenue for the fourth quarter which was down three per cent from the comparative period’s US$1.66 billion, a figure that analysts expected. Due to asset impairments and loss on real estate sales, Hyatt reported a consolidated net loss of US$56 million compared to its US$26 million net profit in the prior period. After adjusting for these special items, Hyatt’s adjusted net profit was US$40 million with an adjusted earnings per share (EPS) of US$0.40, well below analyst estimates of US$0.76.

For the overall 2024 financial year, Hyatt generated US$6.65 billion in revenue with consolidated net profit at US$1.30 billion which was largely driven by a US$1.25-billion gain on real estate sales. After adjusting for these one-time gains, Hyatt’s adjusted net profit was US$375 million, an improvement to the adjusted US$296 million in 2023. This resulted in the adjusted EPS rising from US$2.75 to US$3.66. The adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) was US$1.10 billion.

Hyatt’s 2025 guidance is for it to generate US$190-US$240 million in net profit, US$1.2 billion in gross fees and an adjusted EBITDA of US$1.15 billion.

Hyatt’s consolidated asset base rose four per cent to US$13.32 billion with US$1.01 billion in cash and cash equivalents. Total liabilities increased three per cent to US$9.50 billion with debt at US$3.33 billion while equity attributable to shareholders was US$3.55 billion.

Hyatt’s stock price is down ten per cent over the last five days from US$163.14 on Wednesday to US$146.81 on Tuesday which pushed its market capitalisation down to US$14.12 billion. This came after a weaker fourth quarter and lower 2025 guidance on its expected performance. Jefferies analyst David Katz reduced his price target on Hyatt from US$176 to US$161 while Barclays analyst Brandt Montour lowered his target from US$162 to US$151. While Bernstein SocGen Group analyst Richard Clarke maintained an outperformance rating, he also adjusted his price target from US$188 to US$173.

Hyatt declared a dividend of $0.15 to be paid on March 12 to shareholders on record as of February 28. This means that approximately US$6.40 million will be paid to class A common shareholders while US$8.03 million will be paid to class B common shareholders.

“Over the past year, we have successfully executed our operational, commercial and growth strategies while simplifying and streamlining our business model. And as we look ahead, we remain focused on operational excellence to continue to grow our core business, while our network is expected to be enhanced by strong organic growth in 2025, benefiting all stakeholders well into the future,” stated Joan Bottarini, Hyatt’s chief financial officer.