Hyatt Rumored To Buy Le Meridien

Press reports and financial analysts are casting Hyatt Hotels Corp. in the role of acquirer of the financially troubled Le Meridien hotel chain. Speculation concerning the fate of Le Meridien, which manages 137 hotels around the world, has been rampant since the hotelier defaulted last month on rent it pays to Royal Bank of Scotland for its London properties. Neither Hyatt nor Le Meridien would comment.

"It's not any secret that Meridien has been up for sale," said Harry Curtis, U.S. lodging and gaming industry analyst with J.P. Morgan. "A Hyatt-Meridien deal absolutely makes sense because you get high-end properties at a reasonable price at fairly close to a cyclical low in the industry, so the timing is quite good."

In March, Hyatt reorganized its operations, combining various functions of the North American organization and Hyatt International. At the time, Doug Geoga, who was named president of Hyatt Corp., alluded to future expansion. "Difficult times such as these present acquisition and growth opportunities," he said, noting that privately held Hyatt had the financial resources to make acquisitions.

According to analysts, a company the size of Hyatt would need to expand if it is going to compete effectively against such multi-brand rivals as Marriott International, Hilton Hotels Corp. and Starwood Hotels & Resorts Worldwide.

For travel buyers, any lodging industry consolidation is of concern since it limits the number of potential hotel partners with which to negotiate. For Hyatt clients, however, the increased distribution would make the chain potentially more desirable, particularly for those buyers who bring a significant amount of room nights to international markets where Le Meridien has a presence.

"The Meridien brand does have value in its own right," Curtis added. "My guess is they'll be interested in retaining that brand."