Hyatt Hotels Corp. may have already achieved dominance in the high-end all-inclusive space, but the company isn't done expanding.
On Feb. 10, Hyatt announced plans to acquire Playa Hotels & Resorts for $2.6 billion, a deal that would add 24 Caribbean and Mexican all-inclusives to its fold of more than 120 Inclusive Collection resorts globally.
And while the transaction is expected to streamline operations for Hyatt and travel advisors alike, industry watchers say they are monitoring whether the hotel company can keep up with its rapid growth.
The transaction, expected to close later this year, represents more than just pure portfolio expansion.
Patrick Scholes, director of lodging and leisure equity research at Truist Securities, said in a note that one of the key benefits would be Hyatt's ability to secure long-term management agreements for its Hyatt Ziva and Hyatt Zilara properties, the bulk of which have been operated by Playa as part of a long-standing partnership between the two companies. (Hyatt currently owns 9.4% of Playa's shares; it first invested in Playa in 2013, its first foray into the all-inclusive sector.)
"Hyatt furthers control of the Ziva and Zilara brands without Playa," wrote Scholes, adding that the acquisition simultaneously "eliminates a third-party manager competitor" and enables Hyatt to potentially "benefit from any Playa operational leanings."
Playa's current portfolio extends well beyond Hyatt. It also owns and/or operates properties flagged under other major brands, including Hilton, Marriott's Luxury Collection, Wyndham and an upcoming Kimpton all-inclusive.
Hyatt said it plans to sell off Playa's owned real estate and expects to realize at least $2 billion in proceeds from those sales by the end of 2027. And should the company maintain the management contracts on the sold properties, Scholes estimated they could generate around $20 million in annual management and franchise fees for Hyatt.
"As a large global corporation/public company, it will be 'easier' for Hyatt to sell hotels than it would for Playa," Scholes wrote in his analysis, adding that while Playa has historically faced challenges in selling assets due to being a smaller public company, Hyatt "does not have Playa's small-size challenge" and will likely be able to sell those assets for even 10 times their earnings.
The acquisition would also expand Hyatt's distribution channels, Scholes said, including its ALG Vacations wholesale packager, to Playa's full portfolio.
Abbey Meyer, CEO and founder of Missouri-based Altitude Travel, said that aspect of the acquisition could help streamline what has historically been a fragmented booking process for travel advisors.
"Everybody kind of wondered why the Hyatt Ziva and Hyatt Zilara brands, which have such a great reputation, were kind of split and you have to either book some direct or some you can book through ALG Vacations via VAX [Vacation Access] -- it was complicated," Meyer said, adding that Hyatt Inclusive Collection properties are among her agency's most-booked brands.
"The good news here is it'll make things less confusing," she added.
Is Hyatt overdoing it?
A Playa acquisition would be far from the first time Hyatt has made big waves in the all-inclusive sphere.
It was 2021's $2.7 billion acquisition of Apple Leisure Group that marked Hyatt's initial power play in the sector, bringing ALG's Secrets, Dreams, Breathless, Zoetry, Alua and Sunscape all-inclusive brands as well as ALG Vacations under the Hyatt umbrella.
That move was followed by a 2024 joint venture with Spain's Grupo Pinero, which added Bahia Principe Hotels & Resorts to Hyatt's Inclusive Collection, as well as last year's launch of Hyatt Vivid, a new upper-upscale all-inclusive concept targeting younger travelers.
Industry observers are closely watching the company's rapid expansion. Altitude Travel's Meyer, for example, pointed out that this latest deal comes while Hyatt is pursuing aggressive growth into Europe.
"You can get just a little nervous that they're biting off more than they can chew," Meyer said, adding that with all-inclusive demand up sharply over the past few years, BDMs and other resort representatives already have their work cut out for them. "But, hopefully, this is a win-win for everybody."
Yariv Ben-Ari, co-chair of the real estate hospitality group with New York law firm Herrick Feinstein, also voiced concern about the company's rapid expansion in the space.
"Hyatt will have to make sure that what they're promising their loyal guests and their loyalty programs, they can deliver," he said. "And they will have to make sure they have enough people to man the phones and provide guest services."
The long-term future of Playa's relationships with other major hotel brands also remains somewhat unknown.
According to Ben-Ari, while existing bookings will be honored, "certainly long term, they may have to revisit some of those relationships."