Hyatt Hotels Corp. has acquired The Peabody Orlando, a 1,641-key hotel, from UST Hotel Joint Venture Ltd. for $717 million and will rebrand it as the Hyatt Regency Orlando Convention Center.
The deal with Memphis-based Belz Enterprises and Estein & Associates USA, Ltd. of Orlando, the joint venture partners, is expected to close Oct. 1. It will be the sixth Hyatt-branded hotel in Orlando but its first convention hotel. The Peabody Orlando has more than 200,000 square feet of meeting space and is attached to the Orange County Convention Center, which has more than 2 million square feet of space.
“This transaction brings us a very high-quality hotel in one of the most popular cities in the world and enhances the Hyatt Regency brand – already a leader in meetings and conventions – with a presence adjacent to one of the largest convention facilities in the U.S.,” Stephen Haggerty, global heads, real estate and capital strategy for Hyatt, said in a news release. “We are confident that we will be able to build on the strong performance of this property through the depth and breadth of our relationships with meeting planners and corporate travel managers and the global strength of our brand.”
Haggerty noted that Orlando is the second largest hotel market in the United States and continues to be in demand by a variety of visitors.
“The strong base of business booked at the Orange County Convention Center over the coming years demonstrates the attractiveness of the market to associations and groups,” Haggerty said. “The overall number of visitors to Orlando continues to increase and it remains one of the most visited vacation destinations.”
The Peabody Orlando opened in 1986 as an 891-room luxury hotel. A $440 million renovation and expansion that was completed three years ago added a 750-room tower, another ballroom, more exhibit and meeting space, a 2,100-space parking garage, a spa, pools, restaurants and other amenities. It now has 1,641 guest rooms, 193 suites and 300,000 square feet of flexible meeting space with more than 150,000 square feet on one floor.
Executives of the two companies that formed the Peabody’s joint venture said it was time to turn over their investment.
“The sale of the Peabody is a strategic move for the partnership that afforded us a venue to free up capital and, as well, allows us to take advantage of other opportunities as they arise in the future,” Andy Groveman, senior vice president of Belz Enterprises, said in a separate release.
Lance Fair, vice president of UST Hotel Corp. and COO of Estein and Associates USA, said, “We have been invested in The Peabody Orlando for almost 10 years, which is our typical holding period. The ownership in The Peabody with Belz has been a great investment for us.”
Hyatt said it expects the hotel to generate about $10 million of EBITDA in the fourth quarter of 2013 and approximately $55 million of EBITDA in 2014.
Because of the major renovations UST Hotel Corp. did on the property, Hyatt said it does not plan to invest significant capital there in the near future.
Belz will continue to own The Peabody Memphis, a 464-room luxury hotel which also underwent a recent multi-million-dollar renovation. The company sold The Peabody Little Rock last year to Fairwood Capital L.L.C. and it is now being operated at the Little Rock Marriott.