What does the acquisition by Caption By Hyatt include in terms of agreements and trade names?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) The goodwill, which is tax deductible and recorded on the management and franchising segment, is attributable to the growth opportunities we expect to realize by expanding our lifestyle offerings and providing global travelers with an increased number of elevated hospitality experiences.
- (2) Includes intangible assets related to the Dream Hotels, The Chatwal, and Unscripted Hotels brand names. Certain brand names are amortized over useful lives of 20 years.
- (3) Amortized over useful lives of approximately 9 to 22 years, with a weighted-average useful life of approximately 17 years.
During the year ended December 31, 2023, we recognized $7 million of transaction costs, primarily related to regulatory, financial advisory, and legal fees, in transaction and integration costs on our consolidated statements of income.
Hyatt Regency Irvine—During the year ended December 31, 2022, we acquired Hyatt Regency Irvine from an unrelated third party for $135 million, net of closing costs and proration adjustments. Upon completion of the asset acquisition, we recorded $135 million of property and equipment within our owned and leased segment on our consolidated balance sheet.
Dispositions
Hyatt Regency O'Hare Chicago—During the year ended December 31, 2024, we sold Hyatt Regency O'Hare Chicago to an unrelated third party and accounted for the transaction as an asset disposition. We received $11 million of proceeds, net of closing costs and proration adjustments, issued a $20 million secured financing receivable with a maturity date of five years (see Note 6), and committed to loan up to $45 million for a future renovation. Upon sale, we entered into a long-term franchise agreement for the property. The sale resulted in a $5 million pre-tax loss, which was recognized in gains (losses) on sales of real estate and other on our consolidated statements of income during the year ended December 31, 2024. The operating results and financial position of this hotel prior to the sale remain within our owned and leased segment.
Hyatt Regency Orlando—During the year ended December 31, 2024, we sold Hyatt Regency Orlando and an adjacent undeveloped land parcel to an unrelated third party. We received $723 million of cash consideration, net of cash disposed, closing costs, and proration adjustments, and accounted for the transaction as an asset disposition.
In conjunction with the sale, we received a $265 million preferred equity investment in the parent of the third-party entity that owns the property. Upon sale, we estimated the fair value of our preferred equity investment, which is redeemable at our option on various dates starting in 2030, to be approximately $188 million and recorded a HTM debt security within other assets on our consolidated balance sheet (see Note 4).
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to the 2025 Caption By Hyatt Franchise Disclosure Document, Hyatt's acquisition activities involve various agreements and trade names. Hyatt provides access to its intellectual property, including the Hyatt brand names, in exchange for sales-based fees from hotel owners. These fees are typically paid monthly as owners and franchisees benefit from using Hyatt's brand and systems. Under franchise agreements, Hyatt also collects initial fees from franchisees, which are combined with royalty fees and recognized over the term of the agreement.
Hyatt's acquisitions also include intangible assets related to specific brand names. For example, the FDD mentions intangible assets related to the Dream Hotels, The Chatwal, and Unscripted Hotels brand names. These brand names are amortized over their useful lives, with certain names amortized over 20 years. This amortization reflects the allocation of the cost of these intangible assets over the period they are expected to contribute to Hyatt's revenue.
Furthermore, Hyatt enters into long-term management and franchise agreements when disposing of properties. For instance, after selling Hyatt Regency O'Hare Chicago, Park Hyatt Zurich, Hyatt Regency San Antonio Riverwalk, and Hyatt Regency Green Bay, Hyatt entered into long-term franchise or management agreements for these properties. This allows Hyatt to continue benefiting from these locations through franchise and management fees, even after the properties are sold. These agreements ensure that the properties continue to operate under Hyatt's brand and standards, maintaining consistency for customers.