Hyatt sells 15 Playa assets for $2 billion

CHICAGO — Hyatt has sold the 15 resort assets it acquired from Playa Hotels & Resorts to Tortuga Resorts, a joint venture between an affiliate of KSL Capital Partners and a Mexican family office called Rodina, for $2 billion.

Once Hyatt completed its acquisition of Playa Hotels & Resorts on June 17, the next expected step was for the company to announce asset sales of the properties that were expected to fund most of the $2.6 billion acquisition.

Hyatt said it could achieve up to an additional $143 million in earnout if certain operating thresholds are met. The company stated that the transaction is expected to close before the end of 2025, subject to regulatory approval in Mexico and other customary closing conditions. Hyatt will also retain $200 million of preferred equity in connection with the real estate transaction.

The real estate portfolio includes all 15 of the all-inclusive resort assets in Mexico, the Dominican Republic and Jamaica. In addition, Hyatt and Tortuga will enter into 50-year management agreements for 13 of the 15 properties. Hyatt was already the brand for eight of the 15 Playa-owned properties, and in mid-June, the company converted six more under its flag. One resort, the 238-key Wyndham Alltra Playa del Carmen in Mexico, has remained under Wyndham’s flag. Hyatt said the two remaining properties are still under separate contractual arrangements.

Analysis of the deal

Analyst C. Patrick Scholes of Truist Securities said Hyatt’s sales announcement happened quicker than expected.

“The general expectation was that the company would sell the hotels individually over the next year,” he said.

While we/investors assumed Hyatt had long been engaged in discussions for divesting the [Playa] assets, there was, of course, no certainty that Hyatt could sell the assets, particularly in a time of macro volatility.

Patrick Scholes

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While the real estate sales themselves don’t represent a massive upside, Scholes said that completing them by the end of 2025 removes several downside risks for Hyatt stock, especially as it continues to tout its growth as an asset-light company.

“While we/investors assumed Hyatt had long been engaged in discussions for divesting the [Playa] assets, there was, of course, no certainty that Hyatt could sell the assets, particularly in a time of macro volatility,” he said.

Analyst Michael Bellisario told Hotel Investment Today earlier in June that the primary motivation of this deal was for Hyatt to flip the below-market franchise agreement to a market value and allow the company to charge a higher per-room management agreement while also extending the contracts, especially for the Hyatt Ziva and Hyatt Zilara properties, which are roughly 70% to 75% of the revenues, fees and EBITDA for Playa.

Inside the deal

Mexico City-based Tortuga Resorts is an affiliate of Denver-based KSL and Mexico City-based Rodina and has a platform of resorts across Mexico and the Caribbean. It lists eight properties in its current portfolio, including two under the Hyatt flag: the Hyatt Zilara Riviera Maya All-Inclusive Adult Resort and the Hyatt Ziva Riviera Cancun All-Inclusive Resort. According to Scholes, Tortuga is expected to invest capex in selected properties. 

Hyatt stated that following the sale of the real estate portfolio, its net purchase price for Playa’s asset-light management business is approximately $555 million, net of the gross proceeds from asset sales. Hyatt expects to earn $60 to $65 million of stabilized adjusted EBITDA in 2027, inclusive of earnings from Unlimited Vacation Club and ALG Vacations, which represents an implied multiple of 8.5x – 9.5x. That implied multiple would be further improved if the $143 million earnout conditions are met.

“The planned real estate sale to Tortuga transforms the acquisition of Playa Hotels & Resorts into a fully asset-light transaction and increases Hyatt’s fee-based earnings,” Hyatt President and CEO Mark Hoplamazian said in a news release. “Hyatt has secured long-term, durable management agreements and the planned real estate sale demonstrates Hyatt’s commitment to its asset-light business model.”

Hyatt said that once the real estate sale is finalized, the company is required to use the proceeds to repay the delayed draw-term loan used to fund a portion of the Playa acquisition. The company expects pro forma net leverage to be consistent with the thresholds necessary to maintain its investment-grade credit profile.

BDT & MSD Partners is acting as the lead financial advisor to Hyatt, with Berkadia serving as Hyatt’s real estate advisor and Latham & Watkins LLP as Hyatt’s legal advisor. Goldman Sachs & Co. LLC is acting as exclusive financial advisor to Tortuga and Simpson Thacher & Bartlett LLP is acting as Tortuga’s legal advisor.