US: Marriott Vacations Worldwide [MVW] has announced that it has entered into a definitive agreement to acquire Welk Resorts, of the largest timeshare companies in North America, for approximately $430 million, including an estimated 1.4 million MVW common shares.
The acquisition is expected to close early in the second quarter of 2021.
Welk opened its first vacation ownership resort in 1984 and today operates a portfolio of eight upper upscale vacation ownership resorts located primarily in highly sought-after West Coast US vacation markets, with nearly 1,400 keys, 55,000 owners and over three years of built inventory. Marriott said it intends to rebrand all Welk resorts as Hyatt Residence Club resorts once obtaining all necessary approvals, increasing the latter’s footprint while providing the company with substantial growth opportunities.
MVW CEO Stephen P. Weisz said: “Welk’s premier resorts are in highly desirable vacation markets, including San Diego, Breckenridge, Lake Tahoe and Cabo San Lucas, Mexico, and will be a nice addition to our footprint.
“The acquisition will expand Hyatt Residence Club’s geographic presence while providing substantial future growth opportunities. By leveraging our high-value marketing and sales channels and leveraging more efficient rental distribution channels, we expect to be able to drive higher contract sales and expand margins,” he added.
The acquisition will facilitate a number of growth opportunities and margin improvements, including the following:
- Expanding Hyatt Residence Club business dramatically: Upon rebranding of the Welk resorts, the acquisition will expand the number of Hyatt Residence Club resorts by 50 per cent, increase the number of keys by nearly 90 per cent, and grow the total number of owners from approximately 33,000 currently to almost 90,000.
- Supporting future growth potential: Welk has over three years of built inventory to support future growth, as well as co-located land available for future development.
- Significant margin improvement opportunity: Once integrated, the transaction will enable MVW to improve margins for the Welk business by replacing high-cost marketing with more efficient branded channels, as well as leveraging other more efficient tour channels. In addition, the company also expects to achieve cost savings and other revenue enhancements, including improved rental margins by leveraging Hyatt’s global distribution
Welk Resorts president and CEO, Jon Fredericks, said: “We couldn’t be more excited for our Welk Resorts owners and team members to have MVW take us to their next chapter. They share the same values of excellence which makes this the perfect pairing to build on the foundation laid by the Welk team and generations of the Welk family.”
J.P. Morgan is acting as an exclusive financial advisor to MVW, BakerHostetler as legal advisor to MVW, BofA Securities as exclusive financial advisor to Welk, and Hogan Lovells as legal advisor to Welk.
The news comes less than a fortnight after it was announced that a new $1.5 billion mega-resort, the Evermore Orlando Resort, will be built on the doorstep of Walt Disney World in Florida and welcome guests by the summer of 2023.
The 1,100-acre resort, which aims to take the vacation home business into a “new level of luxury and sophistication”, is being created by Texas-based real estate investment and development firm, Dart Interests. The prospective development includes plans for villas, flats, an upscale hotel, a 20-acre tropical beach complex and a crystal lagoon.
The range of mansion-type villas, vacation rentals and flats will provide up to 10,000 bedrooms, many of which will accommodate visitors to the theme park. The resort’s flagship Conrad Hotel will hold 433 rooms and compete with Disney’s own five-star Four Seasons Hotel nearby.