Hyatt recently announced the purchase of Apple Leisure Group but has not said much about its plans for Apple Vacations and that creates some odd bedfellows.
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Hyatt Acquires ALG (Who?)
Hyatt Hotels (NYSE: H) announced its acquisition of Apple Leisure Group (ALG) and its many subsidiaries. Travel agents certainly know ALG but consumers less so. Apple operated some physical travel agency offices whereby consumers could conduct in-person booking appointments, but it was better known to travel agents for its charter and group sales.
The key points Hyatt management noted at the time of the acquisition and in interviews were:
- Adds 100 premium (and many all-inclusive) resorts
- Does not change Hyatt’s asset-light approach with an 80% fees-based revenue goal
- Increases Hyatt’s footprint in key markets across the Caribbean and Europe
What About Apple Vacations?
In the press release, Hyatt didn’t really discuss the myriad of other businesses that were included in the purchase like Apple Vacations, the retail travel agency. The subsidiary has several additional flags, some of which include Funjet, Cheap Caribbean, Southwest Vacations, and United Vacations. Those brands promote ALG-owned properties but also sell hotel stays from other brands that directly compete with Hyatt.
ALG sells flight packages that are operated by a number of charter carriers which puts Hyatt into the air charter business.
Another complicating factor is Hyatt’s tie-ups with American Airlines who has its Vacations unit managed by “VAX” a competitor to ALG. It’s in Hyatt’s best interest to continue to promote its relationship with World of Hyatt and American Airlines Advantage, but it’s also in Hyatt’s benefit to book tickets with Southwest and United in a direct revenue conflict.
I reached out to Hyatt early last week for comment on these other brands and products but had not received a response by the time of publication.
Conclusion
Hyatt’s failure to discuss this end of the business suggests that they may not have an interest in retaining it. It’s interesting that Hyatt will both recommend competing brands through ALG, while fighting them for business in the same markets.
What do you think? Will Hyatt maintain ALG’s travel agency businesses? Will Hyatt sell this portion of the business?
It is a bit of a conflict, but is it really much different than ALG’s current setup where they will sell other resort brands on their OTA/Vacation sites?
“…Apple operated some physical travel agency offices whereby consumers could conduct in-person booking appointments,..” are you sure about this fact?
Like the previous poster Ben commented, Apple has made the practice of selling competitor’s brands their trademark since day one while they built AM Resorts to compete with those same brands. Nothing new here folks.
At one point they did operate physical locations, but up to the last few years had branding relationships with other travel agencies.
Here’s the issue with both your comment and Ben’s – it’s not an issue for Apple Leisure Group to sell competing resorts with their own. They had to as they started selling vacations in the 1960s and only bought/opened their first resorts in the mid-2000s. However, Hyatt has not been in the practice of marketing and selling competing resorts from the likes of Marriott, IHG, and smaller regional competitors. That’s the issue, Hyatt owns 100% of ALG now in a $2.7bn all-cash deal. So while it’s been normal practice for ALG and “nothing new here”, for Hyatt who now owns 100% of the company, it is new. Couple that with the fact that Hyatt doesn’t talk about this side of the business AT ALL and I predict we will see even more change on this front.
Did you know that United Vacations was once operated by MLT Vacations — which is a wholly-owned subsidiary of Delta Air Lines — as recently as 2014?
I mentioned that bizarre relationship in this “click bait” article from 2015: https://thegate.boardingarea.com/you-wont-believe-what-happened-next-after-how-surprised-i-was-with-these-especially-with-2/
Talk about odd bedfellows…