Hyatt Corp. today announced it will establish its own midprice hotel brand by acquiring the Blackstone Group's 143-unit AmeriSuites chain. The deal is expected to close in early January.
Hyatt said the acquisition-the terms of which have not been disclosed-will help establish a new Hyatt brand "that is fully distinguishable from its existing portfolio of 214 upper upscale and luxury hotels in 43 countries around the world." Post-acquisition, Hyatt plans to feed more than $150 million "in capital expenditures and related brand and marketing innovations" to the new brand, the company said in a statement.
"Growth potential in the upscale limited service category is significant both in the U.S. and internationally," said Steve Goldman, Hyatt's executive vice president of acquisitions and development. "Hyatt will analyze opportunities for expanding the new brand in strategic markets around the world."
"This is an attempt to diversify," said Robert Mandelbaum of PKF Consulting. "Hyatt typically has been upscale, at the upper end of the market. Most of the big names-Marriott, Hilton, etc.-have diversified products reaching into different markets." While Mandelbaum said Hyatt does have financial interests in such midprice brands as Hawthorne Suites and Microtel Inns, the outright purchasing of a midprice hotel brand is "a first step to replicate what the other big national chains have done."
"There are certainly more travelers paying midpriced room rates," Mandelbaum said. "If you want to grow your brand, the number of places where you can operate a Hyatt are limited. If you're looking to grow in the future, there are more places to put midprice hotels."
The acquisition comes amid a restructuring at Hyatt with the establishment of the Global Hyatt Corp., which by the end of the month will be the parent of Hyatt entities throughout the world.
The Blackstone Group, a private investment and advisory firm, in August bought Prime Hospitality, whose brands included AmeriSuites. Hyatt senior vice president of acquisitions and development Jim Abrahamson will head the AmeriSuites business for Hyatt.