Hyatt, Playa enter exclusive merger talks

FAIRFAX, Virginia – Playa Hotels & Resorts N.V. confirmed on Monday that it has executed an exclusivity agreement with Hyatt Hotels Corp. to negotiate strategic options, which may include the acquisition of the company by Hyatt. The exclusivity agreement will remain in place until February 3, 2025.

A merger with Hyatt reportedly would top the $1.2 billion market capitalization of Playa Hotels as of Friday's close.

Playa currently owns and/or managers some 24 resorts with 8,627 rooms with strength in resort markets such as Jamaica, Mexico and the Dominican Republic. Eight are third-party management agreements, while the other resorts are owned and managed by Playa. Playa Hotels and Hyatt already work together with Playa managing all-inclusives such as Hyatt Zilara and Hyatt Ziva.

C. Patrick Scholes of Truist Securities published a note on Monday morning saying it comes as no surprise to them that Playa is an interested seller. He said they have telegraphed as such for the past several years as they believe shares are undervalued on the public market. “On the other hand, we had always thought that a private buyer such as a high-net-worth family would be the most likely buyer as opposed to Hyatt, which has become much more of an asset-lite company over the past several years by selling hotels as opposed to buying them,” Scholes said. “While hardly a ‘done deal,’ we see a greater likelihood than not that this transaction will be completed.”

Scholes added that should Hyatt prevail, their course of action would likely be to convert the all-inclusive hotels that are not currently Hyatt branded to a Hyatt brand, and then sell off the real estate. “We speculate the real estate could be sold-off over time or possibly via a pre-arranged sale concurrent with the possible acquisition of Playa,” Scholes said.

Scholes said Truist sees Playa shares worth at least $13, if not higher. “Our $13 price target is based on a 10.0x multiple of 2026E EBITDA. We estimate shares are trading at 9.2x and 8.1x 2025 and 2026 EV/EBITDA, respectively. Given renovation disruptions in 2025, we believe 2026 earnings (and beyond) is the proper year in which to value the company.”

R.W. Baird analyst Michael Bellisario wrote on Monday saying they do not expect Hyatt to acquire Playa in an all-cash or cash-and-stock transaction because too much of Playa's value is real estate ownership and competitor brands would not approve Hyatt as an owner or operator; Playa owns or manages 12 resorts that are Hilton-, IHG-, Marriott-, and Wyndham-branded. “We see a potential outcome where Hyatt finds a partner or partners to acquire some (or all) of Playa's independent and/or Hyatt-branded resorts – Hyatt could help finance the transaction and would enter into new (and more lucrative) long-term franchise/management agreements.”

In a statement, Playa said its board of directors has been evaluating opportunities to maximize value for shareholders and has engaged with several potential counterparties. “Our Board and management team regularly review our structure, strategy and opportunities to enhance shareholder value, and we are pleased to enter into exclusive discussions with Hyatt regarding potential strategic options."

“Hyatt's interest in our company is a testament to the strength of our business and the dedication of our incredible Playa team. The Playa Board and management team will remain open-minded and continue to act in the best interests of all Playa shareholders,” said Playa Chairman and CEO Bruce Wardinski.

Hyatt already owns 9.99% of Playa shares. In a statement on Monday, President and CEO Mark Hoplamazian said, “Playa has been a valuable partner for many years, is one of the world’s strongest operators of all-inclusive resorts, and owns a premier portfolio of high-quality, high-end all-inclusive resorts in iconic locations and key markets across the Caribbean and Mexico. Strategic alternatives under consideration could have compelling strategic merit to add new incremental durable fee streams for Hyatt. We remain steadfastly committed to our asset-light business model and if this process continues, we will continue to map out a clear path for an asset-light outcome for any strategic alternatives we undertake.”