M&A is alive and well, and Hyatt, this time, is on the buy side.
Hyatt Hotels Corp. has acquired Miraval Group, whose business is wellness resort destinations and spas, from private-equity group KSL Capital Partners. The acquisition by Hyatt involves the brand, the management team and the real estate: the flagship Miraval Arizona Resort & Spa in Tucson, the Travaasa Austin Resort, which is currently being redeveloped and will transition to the Miraval Austin by 2019, and the Miraval Life in Balance Spa at Monarch Beach Resort in California. Hyatt is also now pursuing an agreement to acquire and redevelop the 380-acre Cranwell Spa & Golf Resort in Lenox, Mass.
The acquisition includes an initial investment of $215 million by Hyatt and the expectation of an additional $160 million over the next two to three years.
The Miraval brand will continue to be led by Steve Rudnitsky, an industry veteran with past stints including leadership positions with Dolce Hotels & Resorts, Wyndham Worldwide and the former Cendant Corporation. Rudnitsky was tapped as president and CEO of Miraval in October 2015.
Mark Hoplamazian, president and CEO of Hyatt Hotels Corp., said buying Miraval Group aligned with Hyatt's overall ethos. "Our purpose is to care for people so they can be their best. That's our North Star," he said. "As a company, we are focused on the high-end traveler, and we identified wellness as important to them."
Hyatt is seeking to carve out a space in the hot-trending wellness space. While competitors like IHG launched its own wellness-focused brand (Even), Hyatt is electing to break in via acquisition, and, as Hoplamazian said, was attracted to Miraval because of its "uniqueness" and "holistic approach" to wellness.
But Hyatt is also betting on the resorts market. Again. In July 2013, Hyatt made a $325-million investment in the all-inclusive Playa Hotels & Resorts. Hotels in the collection fall into the Hyatt Ziva and Hyatt Zilara brands.
Hyatt will initially have skin in the game and is currently putting capital behind the Tucson expansion, which includes new villas, and the redevelopment of Austin. After that, it will look for third-party developers and owners to expand the Miraval brand on a global scale, Hoplamazian said, adding that opportunities were currently under evaluation for additional Miraval destination resorts and Life in Balance Spas. Hoplamazian said expansion could come via ground-up development and acquisitions and repositionings.
Resorts of this scope require acreage, but Hoplamazian was not to opposed to an urban application, too, though it more than likely would involve the Miraval spa concept "rather than crunch what is 400 acres in Tucson into three floors in a major city," he said.
To hear it from Rudnitsky, consummating a deal stretched back some nine months of discussion. Hoplamazian said he was initially enamored by the brand and the experience after participating in a floating meditation class, which, according to the Miraval Arizone website, involves "induced meditation while you gently rock to the soothing vibrations of crystal bowls." Cost: $75 for 45 minutes.
"It illustrated to me how different a holistic approach is to thinking about mindfulness," Hoplamazian said. "[Miraval] is a huge accelerator of our strategy and gives us more credibility."
A brand like Miraval is also opportunistic, playing into the growing "bleisure" trend, a mashup of business and leisure travel. Hoplamazian said that on one visit to Miraval Arizona, he saw a C-suite group from a major company (he wouldn't name which) on a corporate retreat.
Miraval becomes Hyatt's 13th brand and both Hoplamazian and Rudnitsky said it complemented Hyatt's current consumer base.
The brand will not officially be part of Hyatt Gold Passport, Hyatt's current loyalty program, but will be plugged into World of Hyatt, which replaces Hyatt Gold Passport in March.
According to Hoplamazian, wellness is a trend now, but is on the cusp of becoming a mega-trend that Hyatt is positioning itself in now. According to The Global Wellness Institute, the global wellness economy amounted to $3.7 trillion in 2015, and that the market for wellness in real estate is "gaining traction."