Tourexpi
Hilton (NYSE: HLT) today announced an agreement
with Adventurous Journeys
Capital Partners (“AJ Capital”) to acquire the fan-favorite Graduate Hotels® brand,
adding a significant growth opportunity for the global hospitality leader in
the fast-growing lifestyle hotel market.
Hilton will pay $210 million to acquire all rights
to the Graduate brand worldwide, enter into franchise agreements for all
existing and signed pipeline Graduate Hotels, and become responsible for the
brand’s future development and growth. AJ Capital will remain the owner of the
more than 35 operating and pipeline Graduate properties, each of which will be
operated under long-term Hilton franchise agreements.
The transaction, which is expected to close in the
second quarter, subject to customary closing conditions including review and
approval pursuant to Hart-Scott-Rodino, will be immediately accretive to
Hilton. The company expects the fee contribution for the first full year of
ownership to be approximately $16 million.
"Adding Graduate Hotels to our portfolio of
award-winning brands accelerates our expansion in the lifestyle space by
pairing an existing much-loved brand with the power of Hilton’s strong
commercial engine to drive growth."
“Adding Graduate Hotels to our portfolio of
award-winning brands accelerates our expansion in the lifestyle space
by pairing an existing much-loved brand with the power of Hilton’s strong
commercial engine to drive growth,” said Chris Nassetta, president and CEO,
Hilton. “We have long had a high bar for adding brands to our portfolio,
whether organically or through acquisition, and Graduate will be another driver
of growth for us, presenting a unique opportunity to serve more guests in more
sought-after destinations. With thousands of colleges and universities around
the world, we believe the addressable market for the Graduate brand is 400-500
hotels globally.”
The addition of Graduate Hotels to Hilton’s global
portfolio will offer millions of travelers access to unparalleled hospitality
in their favorite university towns. Each Graduate hotel – steeped in local
history, charm and nostalgia – is thoughtfully designed to reflect the unique
character of its local university, offering the perfect setting for gamedays,
reunions, graduations, campus visits and more. Since its inception in 2014, the
brand has grown to span the United States and the United Kingdom, including
locations in Ann Arbor, Michigan; Knoxville, Tennessee; Palo Alto, California;
State College, Pennsylvania; and Oxford and Cambridge, United Kingdom, with new
hotels opening soon in Austin and Dallas, Texas; Auburn, Alabama; and
Princeton, New Jersey.
“We're proud to embark on this new chapter for
Graduate Hotels with Hilton, the ideal partner to steer the brand's continued
growth," said Ben Weprin, founder, Graduate Hotels and CEO, AJ Capital.
"Both Hilton and Graduate Hotels are committed to delivering exceptional
experiences and making a positive impact on communities. Our shared values and
close collaboration will ensure a smooth transition while keeping the Graduate
Hotels' unique brand identity intact. With Hilton's extensive network behind
us, guests can anticipate even more exciting opportunities. We're certain this
partnership will propel Graduate Hotels to even greater heights, while AJ’s
ongoing ownership of the real estate assets lays a strong foundation for our
future success."
The Graduate brand will be incorporated into
Hilton’s fast-growing lifestyle portfolio alongside Canopy
by Hilton, Curio Collection by Hilton, Tapestry
Collection by Hilton, Tempo
by Hilton and Motto
by Hilton – each of which has been launched in the last 10 years to
respond to growing demand from travelers for localized travel experiences.
Hilton’s 2024
Trends Report identified that nearly a quarter of global travelers are
planning getaways for concerts, sporting events and other one-of-a-kind, local
experiences this year, many of which are happening in secondary markets
anchored by universities.
Graduate Hotels are expected to be available for
booking via Hilton channels later this year and will participate in Hilton
Honors, Hilton’s
award-winning guest loyalty program for the company’s portfolio of
more than 7,500 properties worldwide. Members who book directly with Hilton can
access instant benefits, including a flexible payment slider that allows
members to choose nearly any combination of Points and money to book a stay,
exclusive member discounts, free standard Wi-Fi and the Hilton Honors mobile
app.
Hilton continues to offer customers the right stay
for every travel occasion through an unmatched portfolio of industry-leading
brands plus exclusive partnerships that create more experiences for guests to
dream about. The addition of Graduate, as well as a recently announced
partnerships with Small Luxury Hotels of the World and AutoCamp, adds to the company’s dramatic growth trajectory
and reflects its focus on accelerating offerings for guests in the industry’s
fastest-growing markets and segments.
Deutsche Bank Securities Inc. is AJ Capital’s sole
financial advisor on this transaction.
Image
Credit: © Graduate Hotels
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