Leading US hotel group Hyatt is buying resorts operator Apple Leisure Group for $2.7bn, expanding its luxury leisure offerings. The strong recovery of luxury travel alongside the geographical expansion of Hyatt’s market portfolio, point to future gains for the company.
Recovery of luxury travel looks promising
Apple Leisure operates 100 all-inclusive luxury resorts across various brands, including but not limited to Sunscape Resorts and Spas alongside Secrets Resorts and Spas. The addition will dramatically increase Hyatt’s luxury portfolio, which is already largely centred on this market.
GlobalData’s forecasts suggest that room nights occupied for luxury hotels (across 60 core markets) will encounter a greater year-over-year (YoY) increase (69.7%) in 2021 than budget (59%). The greater increase for luxury hotels is likely reflective of the increase in both demand and supply for luxury offerings in 2021 and is a promising sign for the expanded Hyatt portfolio. The doubling of Hyatt’s resort offering will bode well for the increased luxury leisure travel demand during the Covid-19 recovery period. With business travel demand set to remain low for the foreseeable, the acquisition will allow Hyatt to bolster its position in a market expected to recover faster.
For some consumers, national lockdowns and international travel restrictions due to COVID-19 has meant more time at home. This has allowed savings to be made due to reduced spending and travel budgets have increased for some. Therefore, travellers are willing to pay more, seeking luxury breaks, and mark a special occasion on their next getaway. GlobalData’s live poll* found that 28% of global respondents now have a lot higher (16%) or slightly higher (12%) budget for holidays after the past year. 37% did state they cannot afford to go on holiday in the near future, but 28% stated budgets have increased, reflecting that there is clearly a large market share of consumers looking to spend extra on their next vacation.
Trends suggest other hoteliers are banking on the luxury market
Recent trends are reflective of other hoteliers expanding their luxury portfolios. August 2021 saw InterContinental Hotel Group (IHG) announce plans to launch a luxury resort brand to increase its growth. Marriott has also declared that it intends to increase its all-inclusive resort offering; it will be of no surprise if this incorporates more luxury offerings.
Apple Leisure Group is already one of the largest tour operators for package holidays in the US, Mexico and the Caribbean. This deal will increase Hyatt’s European portfolio by 60%, intensifying competition with the likes of Marriott, Hilton and IHG in lodging’s recovery.
*GlobalData’s poll, live since May 2021 – 210 responses