Hilton has signed an agreement with Adventurous Journeys Capital Partners (AJ Capital) to acquire the Graduate Hotels brand, adding a significant growth opportunity in the lifestyle hotel market.
Hilton will pay $210 million to acquire all rights to the Graduate brand worldwide; enter into franchise agreements for all existing and signed pipeline Graduate Hotels; and become responsible for the brand’s future development and growth. AJ Capital will remain the owner of the more than 35 operating and pipeline Graduate properties, each of which will be operated under long-term Hilton franchise agreements.
The transaction, which is expected to close in the second quarter, subject to customary closing conditions including review and approval pursuant to Hart-Scott-Rodino, will be immediately accretive to Hilton. The company expects the fee contribution for the first full year of ownership to be approximately $16 million.
“Adding Graduate Hotels to our portfolio of award-winning brands 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,” said Chris Nassetta, president/CEO, Hilton. “We have long had a high bar for adding brands to our portfolio, whether organically or through acquisition, and Graduate will be another driver of growth for us, presenting a unique opportunity to serve more guests in more sought-after destinations. With thousands of colleges and universities around the world, we believe the addressable market for the Graduate brand is 400-500 hotels globally.”
The addition of Graduate Hotels to Hilton’s global portfolio will offer travelers access to properties in university towns. Each Graduate hotel is designed to reflect the character of its local university. Since its inception in 2014, the brand has grown in the U.S, and the U.K., including locations in Ann Arbor, MI; Knoxville, TN; Palo Alto, CA; State College, PA; and Oxford and Cambridge, U.K., with new hotels opening soon in Austin; Dallas; Auburn, AL; and Princeton, NJ.
“We’re proud to embark on this new chapter for Graduate Hotels with Hilton, the ideal partner to steer the brand’s continued growth,” said Ben Weprin, founder, Graduate Hotels and CEO, AJ Capital. “Both Hilton and Graduate Hotels are committed to delivering exceptional experiences and making a positive impact on communities. Our shared values and close collaboration will ensure a smooth transition while keeping the Graduate Hotels’ unique brand identity intact. With Hilton’s extensive network behind us, guests can anticipate even more exciting opportunities. We’re certain this partnership will propel Graduate Hotels to even greater heights, while AJ’s ongoing ownership of the real estate assets lays a strong foundation for our future success.”
The Graduate brand will be incorporated into Hilton’s lifestyle portfolio alongside Canopy by Hilton, Curio Collection by Hilton, Tapestry Collection by Hilton, Tempo by Hilton and Motto by Hilton. The company’s 2024 Trends Report identified that nearly a quarter of global travelers are planning getaways for concerts, sporting events and other one-of-a-kind, local experiences this year, many of which are happening in secondary markets anchored by universities.
Graduate Hotels are expected to be available for booking via Hilton channels later this year and will participate in Hilton Honors, Hilton’s guest loyalty program.
Deutsche Bank Securities Inc. is AJ Capital’s sole financial advisor on this transaction.
