Hilton sets sights on lifestyle category growth with Graduate Hotels acquisition

Thursday, March 14, 2024

Today, Hilton announced its decision to purchase the widely admired Graduate Hotels® brand from Adventurous Journeys Capital Partners (“AJ Capital”), marking a significant expansion move into the burgeoning lifestyle hotel sector for the global hospitality titan.

For a purchase price of $210 million, Hilton will obtain global rights to the Graduate brand, establish franchise agreements for all existing Graduate Hotels and those in the pipeline, and take on the responsibility for the brand’s onward development and expansion. While AJ Capital will retain ownership of the existing and forthcoming more than 35 Graduate properties, Hilton will operate these under long-term franchise agreements.

This acquisition, slated to be finalized in the second quarter pending standard closing conditions including Hart-Scott-Rodino review and approval, is expected to enhance Hilton’s financials immediately. The anticipated fee revenue from this acquisition in the first year of ownership is estimated to be around $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 and 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.”

Incorporating Graduate Hotels into Hilton’s expansive global collection will grant millions of travelers exceptional hospitality experiences in beloved university cities. Each hotel under the Graduate banner celebrates the local heritage, culture, and nostalgia of its surrounding university community, offering guests an ideal backdrop for various events such as game days, reunions, graduations, and campus visits. Launched in 2014, the Graduate brand has established its presence across the United States and the United Kingdom, featuring notable locations in cities like Ann Arbor, Michigan; Knoxville, Tennessee; and international spots in Oxford and Cambridge, UK, with upcoming openings in Austin and Dallas, Texas; Auburn, Alabama; and Princeton, New Jersey.

“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 integration of Graduate Hotels into Hilton’s lifestyle hotel group, which includes Canopy by Hilton, Curio Collection by Hilton, and others, addresses the increasing demand for travel experiences rooted in local culture and authenticity. Hilton’s 2024 Trends Report highlights that nearly 25% of travelers worldwide are seeking unique, localized experiences, such as concerts and sports events, often found in university-driven markets.

By the end of this year, travelers will be able to book Graduate Hotels through Hilton’s channels and enjoy benefits of the Hilton Honors program, including flexible booking options, exclusive discounts, and more. This move aligns with Hilton’s commitment to providing diverse and enriching experiences across its portfolio of more than 7,500 properties globally, further exemplified by recent collaborations with Small Luxury Hotels of the World and AutoCamp.

This strategic expansion and focus on unique guest experiences underscore Hilton’s ambition to meet the evolving needs of travelers in rapidly growing travel sectors. Deutsche Bank Securities Inc. serves as the exclusive financial advisor to AJ Capital for this deal.

« Back to Page