TUCSON, Arizona—Hyatt Hotels Corporation is making a multimillion-dollar commitment to wellness with the newly announced purchase of New York-based Miraval Group, which specializes in wellness resorts and spas.
The deal, which officially closed today, includes the flagship Miraval Arizona Resort & Spa in Tucson, the recently acquired 220-acre Travaasa Resort in Austin, Texas, and the Miraval Life in Balance Spa brand, which has a property in Dana Point, California.
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Mark Hoplamazian, |
In an interview prior to the deal’s announcement, Hyatt President and CEO Mark Hoplamazian described the purchase, which has an “initial investment” price of $215 million, as a chance to expand on Hyatt’s core focus of caring for people, even between hotel stays.
“As we engaged more with guests, key areas of want and need kept popping up, and wellness was prominent among them,” Hoplamazian said from the Miraval Arizona. “And (wellness) is more and more on the minds of C-suite executives thinking about productivity and effectiveness in meetings and in life. So what we ID’d with the Miraval opportunity was an opportunity to accelerate how we care for those customers and guests. … And we can do that in a very different way than how hotel companies have approached it in the past.”
The Miraval Group was purchased from Colorado-based private equity firm KSL Capital Partners, which recently has been on the other side of mergers-and-acquisitions activity with purchases of Apple Leisure Group and Outrigger Hotels & Resorts.
Balance and growth
Steve Rudnitsky, president and CEO of Miraval Group, will now lead a “distinct new wellness category” for Hyatt’s brands, he said. Rudnitsky added Miraval is unique in that it offers a more holistic version of “wellness” than its competitors.
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Steve Rudnitsky, |
“We want them to come (to the flagship resort) and find balance very broadly,” he said. “As a result of that, we have a very long set of programs to pick and choose from to define what life and balance is to you and immerse yourself.”
Hoplamazian said he foresees significant growth opportunities for Miraval under Hyatt’s ownership. The company has already pledged $160 million in improvements at the Tuscon and Austin resorts and the acquisition and redevelopment of the 380-acre Cranwell Spa & Golf Resort in Lenox, Massachusetts, which Miraval officials had agreed to acquire before the Hyatt deal closed.
The Cranwell buy is expected to close “within days,” and a 24-month timetable was given for construction work on that property and the Travaasa. Construction is currently underway at the Tucson resort and is expected to be completed by the fourth quarter of 2017.
Hoplamazian said there could be further opportunities for the Miraval resort brand to grow within Hyatt’s existing resort portfolio, possibly through branding at Hyatt resort spas. He said Hyatt also wants to grow the Miraval Life in Balance brand of standalone spas, while exploring ways to interact more with consumers outside of traditional hotel stays.
“We’re thinking about making sure we understand our guests, what they’re looking for and different ways to provide solutions,” he said. “That may involve a hotel stay or it may involve something else, which we’re referring to as adjacent spaces. Wellness is a major dimension of that strategy, and we believe this will come to life not just as an expansion of the Miraval brand, but in finding ways to take the underlying intellectual property and practice of what they do here and pull that in to ways we can help enhance the effectiveness of corporate clients both at our hotels and at their sites.”
Hoplamazian said that while Hyatt has broad growth plans for Miraval, the company will not “rush into this and commoditize the Miraval brand.”
Rudnitsky gave more specifics on the locations he thinks will make sense for new Miraval resorts.
“In terms of our growth prospects, there are destinations resorts in North America, which is what we were focused on prior to acquisition,” he said. “There are some natural locations (for growth). Whether that’s the northern California wine country or the mountains of Colorado or Hawaii, there are places to grow and ways to augment the value of the brand within the hotel industry.”
On the financial side, Hyatt officials said the deal will be paid for using “current operating cash flows and proceeds from the sale of existing assets,” and predict the deal will be “marginally accretive” in 2017 and 2018 with “cash-on-cash yield in the high single digits within four to five years.”
The making of the deal
Hoplamazian said it took the companies about nine months to put the deal together, and Rudnitsky said negotiations sprang organically from casual conversation.
“I really was making a call to catch up with a colleague,” Rudnitsky said of calling Hoplamazian. “We started to talk (about an acquisition) more conceptually. … Then one thing led to another and (negotiations) got more serious.”
Hoplamazian said part of what ultimately drove him to do the deal were his own positive experiences at the flagship resort in Tucson, noting that Miraval looks past individual aspects of wellness like fitness or nutrition and does things the “right way.”
“The first time I came here, I participated in a floating meditation class that was really impactful,” he said. “Just the whole ability to be on your own journey within the space and place, it has an impact on you in a way that’s beyond a diet you’re following or a good workout.”
Ultimately, Hoplamazian said he’s bullish on wellness, both for tourism and in general, describing it as “a very significant megatrend” and “not a fad.”
“Wellness is a huge space,” he said. “The data shows wellness tourism is a $420-million market. It’s part of a broader wellness market estimated to be in the trillions. Wellness tourism is experiencing close to double-digit growth, and it’s just in the beginning stages of growth. It’s growing faster than travel overall.”