Hyatt Hotels Corp. plans to acquire the brand and management platform of New York-based Dream Hotel Group in a deal worth up to $300 million.
Hyatt will pay a base price of $125 million for Dream's brand and management business, which includes a portfolio of 12 properties under the Dream Hotels, The Chatwal Hotels and Unscripted Hotels brands. The deal includes another $175 million contingent upon 24 additional hotels being signed to long-term management agreements in Dream's pipeline.
In an email interview with Hotel News Now, Hyatt President and CEO Mark Hoplamazian said Hyatt officials were approached by Dream Founder and Chairman Sant Singh Chatwal about the acquisition.
"Our culture is key to who we are at Hyatt, and one of the reasons Dream Hotel Group founder Mr. Chatwal approached us, was our culture of care," Hoplamazian said. "He was familiar with our expertise and proven track record in successfully integrating lifestyle brands including Two Roads Hospitality in 2018 while honoring and preserving the unique attributes that make the brands unique and powerful. We have spent the past several months getting to know each other, and carefully working toward the best way to bring Dream Hotel Group’s vibrant lifestyle brands into the Hyatt portfolio, preserving what is special about them and adding Hyatt’s capabilities to those of the Dream Hotel Group’s, and accelerating growth of the brands into the future."
Chatwal will remain as owner of four existing Dream hotels and an additional two slated to open in the future.
“As an owner of Dream Hotel Group properties, I look forward to the next part of our journey and am confident there is a bright future ahead for our hotels, owners, guests and team members as part of the Hyatt family,” Chatwal said in the news release announcing the deal.
The deal is slated to close "in the coming months," according to a news release from Hyatt, and Dream Hotels properties will be added to the World of Hyatt loyalty platform at close. Dream Hotel Group CEO Jay Stein will join Hyatt as head of Dream Hotels. Other key Dream executives also will remain following the acquisition, with Chief Development Officer David Kuperberg becoming head of development for Dream Hotels and Chief Operating Officer Michael Lindenbaum becoming global head of operations for Dream Hotels.
The deal will mark the latest in a string of hotel brand and management acquisitions for Hyatt, starting with the 2018 purchase of Two Roads Hospitality, which included a portfolio of brands including Joie De Vivre and Alila. The company also purchased all-inclusive travel company Apple Leisure Group for $2.7 billion in 2021 and agreed to an "exclusive collaboration" with German Lindner Hotels & Resorts to add 30 European properties to its portfolio in October of this year.
Hoplamazian said what all those deals have in common is they diversify Hyatt's portfolio without adding real estate.
"These asset-light deals broaden our representation in key markets and serve as platforms for growth into the future," he said. "The planned acquisition of Dream Hotel Group will continue our intentional asset-light growth journey and expand our lifestyle portfolio, creating compelling and clearly differentiated experiences for our guests and members around the world."
The previous deals were funded in large part by the company's continued sell down of owned real estate, but Hoplamazian said the Dream Hotels acquisition was enabled not just by the sale of $800 million in real estate so far in 2022 but also "a record level of earnings."
"This has allowed us to repay over $800 million of debt, repurchase nearly $300 million of stock and execute on this acquisition — all at the same time," he said. "The planned acquisition of Dream Hotel Group is yet another accelerant to our net rooms growth in the future as well as a greater fee-based earnings mix."
The deal will be particularly meaningful in growing the company's footprint in New York, where Dream's portfolio includes the Dream Midtown, the Dream Downtown and The Chatwal New York — along with The Chatwal Lodge not far away in the Catskills.
"Upon closing, this expansion will add over 1,700 rooms to Hyatt’s lifestyle portfolio and increase our room count in New York City by more than 30%," Hoplamazian said. "The planned acquisition will extend our brand footprint in key markets around the world with an offering that is distinct and different than any other brand we currently have in our portfolio. We are confident that Hyatt and Dream Hotel Group guests will be excited about being introduced to the expanded stay options of the combined brand portfolio and network of hotels around the world. The Dream brand in particular appeals to a guest profile that is less represented in our existing portfolio, a younger cohort of high-end travelers that avidly seeks out nightlife and celebratory dining venues and experiences."
The initial 12 hotels — which also include properties in Nashville, Tennessee; Los Angeles, California; Miami, Florida; and Durham, North Carolina — are expected to generate roughly $12 million in management fees for Hyatt once stabilized. The additional 24 signed but not opened hotels — which include hotels in Las Vegas, Saint Lucia and Doha — could add an additional $27 million in fees.