Editor’s note: This story is developing and will be updated.
Hilton is acquiring Graduate Hotels, the lifestyle hotel brand located in college towns, the hotel company and the brand’s owner, Adventurous Journeys Capital Partners, announced today.
Hilton will pay AJ Capital $210 million to acquire all rights to the brand worldwide and enter into franchise agreements for existing and signed Graduate hotels. AJ Capital will continue to own the properties, which will operate under long-term Hilton franchise agreements.
Hilton expects the deal to close in the second quarter of this year.
In a statement, Hilton’s President and CEO Chris Nassetta said the addition of Graduate “accelerates our expansion in the lifestyle space by pairing an existing much-loved brand with the power of Hilton’s strong commercial engine to drive growth.”
Hilton believes the acquisition — still pending approval under the Hart-Scott-Rodino Act — would be “immediately accretive,” with a fee contribution for the first full year of ownership projected to be $16 million.
“With thousands of colleges and universities around the world, we believe the addressable market for the Graduate brand is 400-500 hotels globally,” Nassetta said.
There are currently 37 Graduate Hotels, which include four in various stages of development. Graduate Hotels are designed to reflect the character of the universities their college town locations are anchored by. Existing locations are in Ann Arbor, Michigan; State College, Pennsylvania; Palo Alto, California; and more. Forthcoming hotels are slated to open in Austin, Texas, and Princeton, New Jersey.
“Our shared values and close collaboration will ensure a smooth transition while keeping the Graduate Hotels' unique brand identity intact,” said Ben Weprin, the brand’s founder and CEO of AJ Capital, in a statement. “With Hilton's extensive network behind us, guests can anticipate even more exciting opportunities.”
The Graduate brand will join Hilton’s rapidly expanding lifestyle portfolio, which includes Canopy by Hilton, Tempo by Hilton and Motto by Hilton hotels. The company said in 2022 that it expects its lifestyle pipeline to more than double by 2032.
Hilton expects Graduate Hotels to be available for booking on Hilton channels later this year. The hotels will participate in the company’s Hilton Honors loyalty program.
Bloomberg reported that Hilton was considering an acquisition of Graduate last month. In a fourth-quarter earnings call the next day, Nassetta declined to comment on “market rumors and speculation.” He did, however, reiterate that Hilton has a high bar for brand acquisitions. “We have a very tough filtration system,” he said.
“While Hilton has primarily grown their own brands, the 37 hotels in the Graduate portfolio is sizable enough to act as a launching pad while small enough to be able to efficiently bring in alongside the existing Hilton family of brands,” Soohoo Choi, sector leader for travel, hospitality and leisure at professional services firm Alvarez & Marsal, told Hotel Dive last month.
