Apple Leisure Group, NH Hotels alliance to fuel European expansion for AMResorts

Secrets Akumal Riviera Maya. Photo credit: AMResorts

Europe is the apple of Apple Leisure Group's eye.

In partnership with Spain's NH Hotel Group, the two companies announced an alliance to bring AMResorts’ brands to Europe, along with a new midscale brand that has just been launched. 

AMResorts is a subsidiary of Apple Leisure Group and has a current portfolio of six all-inclusive brands, including wellness-focused Zoëtry Wellness & Spa Resorts and adults-only Secrets Resorts & Spas. 

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AMResorts will debut in Spain first under the Secrets and Dreams Resorts & Spas family-friendly brand, as well as the new brand called Amigo Hotels & Resorts, which is billed as "a three-star brand offering a concept completely different to the collection’s existing offerings."

The structure will see AMResorts overseeing brand management and sales while NH will have operational management responsibilities of the resorts. The first four hotels are expected to open in 2019 in Lanzarote, Fuerteventura and Mallorca. They will be conversions of existing hotels, which will undergo top-to-bottom renovations to match the standards of AMResorts’ brands.

Partnering Up

This is not the first time AMResorts and NH have combined for growth. Seven years ago, the companies established a similar model to open three resorts in the Dominican Republic. At the time, the two companies noted that the model "opens the door to an array of possibilities and is just the beginning of a new strategy between two successful companies both with fundamental experience and desire to strengthen presence within their own tourist destinations."

Years later, the fruits have come to bear.

"This alliance is the result of a long-standing relationship between both companies. The result is an attractive hotel partnership model, which has already proven successful in the Caribbean, and we will leverage each company’s strengths," said Ramon Aragonés, CEO of NH Hotel Group. 

Apple Leisure Group CEO Alex Zozaya called Spain a good start due to its market strength and travelers' embrace of the all-inclusive experience. “Spain has an abundance of beach and leisure destinations as well as one of the strongest all-inclusive resort markets outside of the Caribbean,” he said.

For Javier Coll, EVP and chief strategy officer of Apple Leisure Group, starting out in Spain was a no-brainer. “Spain is the gateway to the leisure segment in the Mediterranean Europe. As the second-most visited country in the world in 2017, the time was right to expand our footprint across the Atlantic Ocean and into Europe, beginning in Spain," he said.

Beyond Spain, Coll mentioned Italy as a possible next country to extend the partnership in. "Strategic alliances allow us to utilize our expertise of the all-inclusive sector, while partnering with a local expert, like NH, to create more value, new brands and development opportunities for our owners," he said.

The partnership also gives AMResorts access to scale that NH enjoys. NH operates nearly 400 hotels in 30 countries, the vast majority in Europe (318 hotels and 50,000 rooms). In Spain alone it has a portfolio of 130 hotels. AMResorts' current roster of properties are exclusively in the Caribbean, Mexico and Central America with a pipeline of 52 open resorts and an additional 20 planned in those regions.

There is no word how each company's rewards programs will be impacted and if there is a reciprocity arrangement. 

While the first four hotels being rolled out under the partnership are conversions, the two companies did not rule out the possibility of new-build opportunities.

The addition of an all-inclusive brand to serve the mid-market space in Amigo is new for AMResorts and represents the identification of a niche it hasn't yet served. "Travelers visiting Spain’s beach and leisure destinations are seeking the combination of service, amenities and a cost-conscious price point—this is the sweet spot of the Amigo brand,” said Gonzalo del Peon, president of AMResorts President. 

New Ownership

The revived alliance comes after a year of transition for Apple Leisure Group. Last December, the company was sold by Bain Capital Private Equity to KKR and KSL Capital Partners. 

Zozaya said the deal would help excite the next phase of the company's growth. “They share our commitment to the vision of Apple Leisure Group as we continue to deliver great results to travelers, guests and hotel owners," he said.

Both KKR and KSL called attention to one of Apple Leisure Group's biggest strengths: differentiation. Beyond AMResorts, other of ALG companies include Apple Vacations, a tour operator focused on destinations in Mexico and the Dominican Republic; Mark Travel, a leisure travel service provider to destinations worldwide; Travel Impressions, a U.S. wholesaler with a global portfolio; CheapCaribbean.com, an online travel agency specializing in luxury vacation packages and resort accommodations in Mexico and the Caribbean; Funjet Vacation, a provider of vacation packages in hundreds of destinations; and Amstar DMC, a destination management company offering airport transfers, tours and excursions. 

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“Apple Leisure Group is a unique franchise with a differentiated market position,” said KKR Members Paul Raether and Tagar Olson. “We are pleased to be partnering with KSL to continue to grow the company and build upon its already premier reputation in the travel industry.”

KSL, a private equity firm specializing in travel and leisure, in January sold the Miraval Group, a wellness resort company, to Hyatt Hotels Corporation. In 2016, KSL acquired resort company Outrigger Hotels and Resorts. In March, Outrigger hired former Trump Hotels executive Jeff Wagoner as president and CEO.