TUCSON, AZ—A chance phone call from one CEO to another last March has resulted in a $215-million deal that has Hyatt Hotels Corp. acquiring New York-based Miraval Group, a provider of wellness experiences, from an affiliate of private equity firm KSL Capital Partners LLC.
The transaction includes the flagship Miraval Arizona Resort & Spa here, as well as Hyatt’s continuance of Miraval’s plans to redevelop the recently acquired 220-acre Travaasa Resort in Austin, TX, and its planned acquisition and redevelopment of the 380-acre Cranwell Spa & Golf Resort in Lenox, MA. The deal also includes the acquisition of the Miraval Life in Balance Spa brand, which opened its first location in Dana Point, CA, last year.
“It’s really a great story, when you think about it,” said Steve Rudnitsky, president/CEO of Miraval Group, who casually phoned Mark Hoplamazian, Hyatt’s president/CEO, last year to “catch up,” setting in motion Hyatt’s interest in bringing the wellness model into its global organization, which offers a portfolio of 12 multi-brand, multi-segment properties.
“What I was really taken with when Steve started talking about Miraval was his focus on mindfulness; that really triggered a great sort of interest on my part and that really evolved over the last nine months,” Hoplamazian told Hotel Business. “It turned out to be us sitting here today as partners going forward. I would have to say that was the real focus.”
“It wasn’t a banker from Wall Street convincing Mark that he should get into the wellness business or that I should monetize the business over at KSL,” added Rudnitsky. “It was really thought out well: two colleagues/friends that really both have a great understanding of their respective businesses and how it might collectively be one plus one equals four as a result of that.”
The Chicago-based hotel company expects to invest an additional $160 million over the next two to three years to fund the Tucson resort’s expansion, the redevelopment of Travaasa, and the acquisition and redevelopment of the Lenox resort. The latter deal was expected to close at the end of January. According to Hyatt, it will fund the investment with current operating cash flows and proceeds from the sale of existing assets, in line with Hyatt’s asset recycling program.
Hoplamazian said Hyatt would wholly own the company, with Miraval Group positioned as a separate business unit within Hyatt Hotels Corp. Rudnitsky will retain his role as president/CEO of the Group with Miraval staff remaining in place.
“We’re buying the brand, the management, the management platform and the resorts, so they will be Hyatt employees, but the actual oversight management-wise will remain with Steve and his team,” said Hoplamazian.
While numerous Hyatt properties around the globe incorporate successful spas and programs, Hoplamazian was quick to point out, “This is not a spa acquisition. It includes spa; it’s an important dimension, but this is not about spa.”
With the ink just dry on the deal, Hoplamazian was considering how the new wellness brand would fit within the Hyatt family.
“We, as a company, have been focused on our purpose, which is the ‘why’ of what we do,” said the CEO. “And we’ve defined our purpose around caring for people so they can be their best. It has been, and continues to inform really everything that we do, strategically and tactically. So in the vein of thinking about how you care for someone and have them be their best, the topic of wellness and ensuring they are able to be productive and effective and also fulfilled, is really important. That’s the first dimension of how we think about areas that we want to get into. The second is that as a company we are at this point the only multi-brand, multi-national hotel brand that is really exclusively focused on the higher-end traveler. And one of the key insights that we have understood well through a lot of engagement we’ve had with our guests over the last year-and-a-half is just how important wellness is to them in their lives.
“We also learned what that really meant to them because I think in the hotel industry, historically, it’s been interpreted as a gym program or a fitness program or a menu that goes to a more-holistic approach, something that’s more impactful actually. That’s been a really important insight for us,” said Hoplamazian.
The Hyatt CEO said he’s also observed an acceleration of attention toward the idea of wellness from major corporations and others who interact with the lodging industry. “C-suite executives that I’ve spoken with, that I’ve engaged with through some other research we had done, and also meeting planners and corporate travel managers who are very much thinking about how they can bring these kinds of practices—that is an approach to wellness that’s more holistic—into what they do for their clients has really taken hold and I think this is the beginning of what will be a very significant groundswell of focus on wellness,” said Hoplamazian. “Most importantly from my perspective, and the reason why I’m so excited about this opportunity, is that I wanted to make sure we had an approach to this that was grounded in a practice that was proven—an approach and a practice that had impact on people’s lives.”
Founded in 1995, the Miraval Arizona Resort & Spa here is well known among those seeking a variety of wellness experiences, providing a base clientele for an expanded portfolio.
Set on 400 acres near the Santa Catalina Mountains, Miraval Tucson has 116 luxury casita-style guestrooms and suites and 16 residential villas, with more under construction slated for completion in 2019.
In addition to fitness, yoga and wellness programs—including private sessions—the resort offers the Miraval Life in Balance Spa in association with luxury cosmetics company Clarins.
Outdoor activities also are featured. There are three swimming pools, lap pool, hot tubs, a tri-level pool with an acupressure stone walkway, a challenge course with climbing ropes and a Zipline, two 18-hole golf courses, two tennis courts, hiking, mountain biking and an equestrian center.
A variety of restaurants and retail outlets also are on property.
Hoplamazian stressed he is intent on keeping both the brand’s identity and ethos intact. “What we want to be sure of is that we maintain the integrity of the experience and that we don’t make any changes that would actually negatively impact people’s experiences here [in Tucson],” he said.
However, he did see opportunity for the Miraval brand to be layered into Hyatt product as well as established as standalone entities.
“I do think that much of what is done here is able to be extended into hotel operations at Hyatt and also outside of hotels with something that we can bring to bear that’s for our customers and for our guests, whether that’s an on-property stay or not. So, we think there are myriad dimensions upon which we can extend the impact of the Miraval ethos and [its]approach. Some of it may be very, very tactically in hotels,” he said.
For example, “It could be that we have existing spas that might be small, suited to become Miraval Life in Balance spas. There might be certain resorts we look at together and either look at evolving an existing Hyatt resort to be a Miraval destination resort or in the development pipeline that we’ve got, which is on a global basis. We do, by the way, intend to take the brand global. We believe there will be an enhanced level of opportunities that we can identify. I would say a lot of the exact ways in which that will be brought to life are still to be determined, and purposely they are meant to be determined as we learn. What we can’t do is try to rush through extending and leveraging the brand if it’s going to compromise the validity and the integrity of what they’ve already got,” Hoplamazian explained.
Among the Hyatt brands that might be a suitable fit for the concept on-property, Hoplamazian ticked off Grand Hyatt, Park Hyatt, Andaz and Unbound Collection. “I would say that some of the essence of the programs that exist [at Miraval Tucson], which can be pulled into different dimensions of our guests’ lives, extends across all of our brands,” he said.
In the realm of mindfulness, the CEO also was mindful of the opportunity within the $420-billion wellness-tourism category, noting the company had been investigating wellness programming prior to the deal with KSL.
“That idea of mindfulness has been actually something we’ve been working on and working with at Hyatt for several years,” said Hoplamazian. “We started working with some outside researchers who were doing work on meditation and the impact that it can have on your ability to practice empathy. We talk a lot about empathy being an essential capacity within Hyatt—you can’t care for someone if you don’t understand them—and that requires the practice of empathy. By the way, you can’t care for them if you don’t then take what you’ve learned and do something about it, either. We have an equation that we use at Hyatt that I coined some time ago, which is ‘Empathy plus action equals care.’ So in our investigation of how to elevate the capacity for empathy, we’ve done a fair amount in the context of how mindfulness is finding its way into companies, into workplaces and that’s really been more of an internal focus than the customer-facing approach.”
“What’s so compelling and excites me about this acquisition is how incredibly strategic it is for both respective brands, for both respective organizations at this time,” said Rudnitsky, citing Hoplamazian’s belief in the value the Miraval brand will bring to Hyatt. “And not just in the hospitality space, but also the adjacent fitness space that has such a broader application with a well-founded, well-regarded brand like Miraval. I further validate that by the success that Miraval has had and what we stand for in the context of balance and the fact that we really emphasize that balance is not something that you find, it’s something that you create. Our mission of inspiring a ‘Life in Balance’ through mindfulness is so incredibly important, and the programming that we have goes well beyond spa. We have an incredibly long list of programs from photography to yoga that we deliver against and our guests really get to define balance and define their stay. And therein lies kind of the ‘special sauce’ if you will,” said Rudnitsky.
He noted the acquisition could allow greater opportunity for Miraval to grow exponentially by virtue of Hyatt’s reservations systems and global distribution. “It will enable us to take the Miraval brand and grow it that much further. It’s all wildly compelling to me,” said Rudnitsky.
Right now, the Miraval CEO said that “everything is full speed ahead” with the properties that are part of the deal, including laying the foundations for the additional villas at Tucson. “In Austin, we just took it over and we’ve already got shovels in the ground there and we’ve got a an early 2019 date for completion. Similarly in Lenox. All systems are go and we’re in good shape there,” said Rudnitsky.
In terms of where Miraval would grow, Hoplamazian did not rule out placing the brand in suburban, resort or urban locations, but tongue-in-cheek was “mindful” not all the deliverables could be realized.
“I think there is a way to bring the Miraval Life in Balance spirit into an urban setting for sure. I cannot say that we could possibly imagine delivering the full measure of what is available in Tucson in an urban environment; that’s just not going to happen. Among other things, it would be really hard to deliver the equine experience. A horse in a high-rise building, for example. There are opportunities in many different types of venues. It’s really going to depend on the customer base in the area and the ability to bring the uniqueness of the elements of the programming here in Tucson to life in the right way. What we won’t do is ‘leverage the brand’ for the sake of planting flags because we can. We’ll do it if it makes sense and we can deliver the experience and the impact with integrity,” said Hoplamazian. HB