Marriott Vacations Worldwide (NYSE: VAC) announced today that it has entered into a definitive agreement to acquire Welk Resorts, one of the largest independent timeshare companies in North America, for approximately $430 million, including approximately 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 U.S. vacation markets, with nearly 1,400 keys, 55,000 Owners and over three years of built inventory. MVW intends to rebrand all Welk resorts as Hyatt Residence Club resorts once obtaining all necessary approvals, dramatically increasing Hyatt Residence Club's footprint while providing the Company substantial future growth opportunities.
"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," said Stephen P. Weisz, chief executive officer of MVW. "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."
Compelling Growth Opportunity and Margin Improvement
- Expands Hyatt Residence Club business dramatically – Upon rebranding of the Welk resorts, the acquisition will expand the number of Hyatt Residence Club resorts by 50%, increase the number of keys by nearly 90% and increase the total number of owners from approximately 33,000 currently to nearly 90,0001.
- Supports 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 the Company 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.
"We couldn't be more excited for our Welk Resorts owners and team members to have MVW take us to this 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," said Jon Fredricks, president and chief executive officer of Welk Resorts.
Approvals
The transaction is expected to close early in the second quarter of 2021 and is subject to the satisfaction of customary closing conditions, including regulatory approvals. Rebranding the resorts to the Hyatt Residence Club brand is subject to final approval from Hyatt Hotels Corporation or its affiliate.
Advisors
J.P. Morgan is acting as exclusive financial advisor to MVW. BakerHostetler is acting as legal advisor to MVW. BofA Securities is acting as exclusive financial advisor to Welk. Hogan Lovells is acting as legal advisor to Welk.
About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. The company has a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs, as well as management of other resorts and lodging properties. As a leader and innovator in the vacation industry, the company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit marriottvacationsworldwide.com.
About Hyatt Residence Club
Hyatt Residence Club provides flexible access to global travel experiences through a diverse portfolio of boutique residential-style retreats. Set in unique destinations from Maui, Carmel and Aspen to Sedona, San Antonio and Key West, Hyatt Residence Club resorts deliver genuine Hyatt® care. For more information, please visit hyattresidenceclub.com. For nightly rentals, please visit hyatt.com.
