Hilton Grand Vacations acquires time share company Diamond Resorts in $1.4bn deal

Timeshare companies sell fractional stakes in vacation properties

Hilton Grand Vacations has 62 properties. Alamy

Hilton Grand Vacations is acquiring Diamond Resorts International, the time-share company owned by Apollo Global Management, in a stock deal with an equity value of about $1.4 billion, according to a statement on Wednesday.

Hilton Grand Vacations shareholders will own about 72 per cent of the combined company with Apollo and other Diamond shareholders owning approximately 28 per cent, according to the statement.

Hilton Grand shares were up 1.4 per cent at $41.15 as of 9.40am in New York. The stock had surged 29 per cent this year through Tuesday’s close.

The pandemic has battered the lodging business over the past year, keeping tourists and leisure travelers home. But vaccines have fueled optimism of a rebound in 2021.

Timeshare companies, which sell fractional stakes in vacation properties, have long catered to young families by offering units that include kitchens and extra bedrooms. Diamond owns 92 resorts, while Hilton Grand has 62 properties, according to the statement.

Vacation travel is poised to bounce back first, with many experts predicting that vaccinated Americans will get out of the house long before corporations get comfortable with resuming business travel. Timeshare companies, which have longer booking windows than traditional lodging, have already indicated travel demand for the second half of this year is well ahead of the pace in 2019.

“The manifestation of pent-up demand is so significant that timeshare companies will need to reduce rental activity to make availably for existing owners,” wrote David Katz, an analyst at Jefferies, in a March 5 note.

Apollo took Diamond Resorts private in 2016 for $2.2bn and made a bid to buy Hilton Grand Vacations three years later for about $40 a share. At the time, Elliott Management had built a position in Hilton Grand and was advocating for a sale before the company put itself on the block.

Blackstone Group also bid for Orlando-based Hilton Grand at the time, Bloomberg News reported.

In January 2020, Las Vegas-based Diamond Resorts entered the Manhattan market in a bid to expand its appeal to millennials. Diamond had been courting younger travelers with concerts, live events and urban locations, and adding a New York property to expand that strategy.