Dive Brief:

• Hersha Hospitality Trust has entered into a definitive merger agreement with private equity firm KSL Capital Partners, in which KSL affiliates will purchase the outstanding common shares of Hersha for $10 per share in an all-cash transaction valued at approximately $1.4 billion. 
• Through the transaction, expected to close in the fourth quarter, KSL will acquire Hersha’s portfolio, comprising 25 experiential luxury and lifestyle hotels and resorts, totaling 3,811 rooms in New York, Boston, Philadelphia, South Florida, California and Washington, D.C. 
• The deal extends KSL’s reach in the luxury and lifestyle segment, currently experiencing heightened demand and year-over-year growth. Several major hotel players have expanded in the space in recent months. 

Dive Insight:

Through the acquisition, KSL will add Hersha’s collection of “impressive, curated” hotels to its holding list, KSL Partner Marty Newburger said in a release. Those properties include The Rittenhouse in Philadelphia, The Cadillac Hotel & Beach Club in Miami and other Marriott, Hilton and Hyatt properties in key “coastal gateway and resort markets.” 

“This transaction is a result of our deliberate actions to focus on key gateway markets and lifestyle and leisure properties, as well as our work to create a concentrated portfolio consisting of some of the highest quality hotels in their respective markets,” Hersha CEO Neil Shah said in a statement. 

The deal expands KSL’s positioning in the luxury and lifestyle space, though the firm is no stranger to the segment. It currently owns several upscale hospitality platforms and properties, including Graduate Hotels’ boutique collection, Outrigger Hospitality Group and select St. Regis and Ritz-Carlton properties. 

“With KSL’s extensive track record investing in high-quality assets in dynamic metropolitan markets across North America and around the world, we are uniquely suited to position [Hersha] for further success over the long term,” Newburger said. 

KSL joins a list of industry players expanding in the luxury and lifestyle space. In June, Hersha affiliate Hersha Hospitality Management launched the Echelon Luxury & Lifestyle division to cater to owners in the independent and boutique hotel space. 

Others making moves in the segment include Hyatt, which earlier this year acquired luxury hotel platform Mr & Mrs Smith, and property management company Pyramid Global Hospitality, which added four luxury and lifestyle properties to its portfolio in May.