Playa Hotels & Resorts and Hilton Announce Strategic Alliance and Future Conversion of Two Initial All-Inclusive Resorts
Playa Hotels & Resorts N.V. (NASDAQ: PLYA) and Hilton (NYSE: HLT) today announced plans to leverage Playa Hotels & Resorts' industry-leading, all-inclusive expertise with Hilton's global portfolio of brands, and over 78 million participating members in Hilton Honors, Hilton's award-winning loyalty program, to accelerate the growth of Hilton's all-inclusive resorts.
As part of the alliance, by the end of 2018, two Playa resorts, THE Royal Playa del Carmen, and Dreams La Romana, will be converted to Hilton all-inclusive resorts, with the potential for the conversion and management of eight additional resorts by 2025. The converted properties will allow guests to earn and redeem Points through Hilton Honors.
"At Hilton, we are dedicated to offering our guests the type of world-class hospitality that matters most to them, in the destinations they want to visit," said Christopher J. Nassetta, president and chief executive officer, Hilton. "Today we are pleased to begin our ambitious expansion journey with Playa. Together we are responding to our shared guests, who are seeking attractive resort offerings. And as our all-inclusive portfolio grows, so too does our commitment to world class hospitality in the Caribbean and Latin America."
Although we anticipate some initial disruption, strategic alliances with world class partners such as Hilton can be transformative for Playa in the long-run. As a result of rebranding and renovations, as well as competitive discounting among our peers in Playa del Carmen and Cancun, at the midpoint, we currently expect our 2018 and 2019 EBITDA outlooks to decrease by $4.5 million and $26.0 million, respectively.
Key strategic positives for Playa:
- Increased brand and sourcing diversification: delivering the best products and service to more guests, more often, in more locations.
- The ability to leverage the expertise and cost of Playa's existing loyal local and regional management teams.
- As part of the transaction, Playa will commence management of the resort currently known as Dreams La Romana. The property will be rebranded as the Hilton La Romana, an All-inclusive Resort by year-end.
- Targeted stabilized cash-on-cash returns of 25% - 31%, on capex of $39k - $42k per key for the two projects combined.
"We look forward to capitalizing on the power of the Hilton brand, the strength of our respective development teams, and Playa's world-class all-inclusive management expertise, to accelerate the growth of Hilton's all-inclusive resorts," said Fernando Mulet, senior vice president, head of development at Playa.
For more information about the financial and strategic implications of the rebranding and conversions described herein, please see the supplemental presentation posted on our website at investors.playaresorts.com, as well as our Current Report on Form 8-K, filed today with the Securities and Exchange Commission.
About Playa Hotels & Resorts N.V.
Playa is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns and/or manages a total portfolio consisting of 20 resorts (7,769 rooms) located in Mexico, Jamaica, and the Dominican Republic. In Mexico, Playa owns and manages Hyatt Zilara Cancun, Hyatt Ziva Cancun, Panama Jack Resorts Cancun, Panama Jack Resorts Playa del Carmen, THE Royal Playa del Carmen, Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos. In Jamaica, Playa owns and manages Hyatt Zilara Rose Hall and Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Dunn's River Beach Resort, Jewel Runaway Bay Beach & Golf Resort and Jewel Paradise Cove Beach Resort & Spa. Playa also owns five resorts in Mexico and the Dominican Republic that are managed by a third party. Playa manages two resorts for third party owners, the Sanctuary Cap Cana, in the Dominican Republic, and the Jewel Grande Montego Bay, in Jamaica.
About Hilton Hotels & Resorts
Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 17 world-class brands comprising more than 5,600 properties with nearly 913,000 rooms, in 113 countries and territories. Dedicated to fulfilling its mission to be the world's most hospitable company, Hilton earned a spot on the 2018 world's best workplaces list, and has welcomed more than 3 billion guests in its nearly 100 year history. Through the award-winning guest loyalty program, Hilton Honors, nearly 85 million members who book directly with Hilton have access to instant benefits, including digital check-in with room selection, Digital Key, and Connected Room. Visit newsroom.hilton.com for more information, and connect with Hilton on Facebook, Twitter, LinkedIn, Instagram, and YouTube.