(Reuters) - Hilton said on Thursday it will buy Graduate Hotels from Adventurous Journeys Capital Partners for $210 million, marking its first brand acquisition in over two decades as pressure in the hotel industry creates opportunity for consolidations.
Hilton said it believes the addressable market for the Graduate brand that primarily caters to locations near major colleges and universities in the United States and the United Kingdom, is 400-500 hotels globally.
"University towns tend to have steady demand, from students, parents and visiting academics, largely unconnected to the global economy," said Richard Clarke, analyst at Bernstein.
Hilton's shares were up marginally during premarket trading after the announcement of the deal with Graduate Hotels, which has only about 35 operating and pipeline properties.
CEO Chris Nassetta had said during the Hilton's fourth-quarter earnings call that "more stress in the system than normal" presented more opportunity for modest acquisitions.
The transaction is expected to close in the second quarter, and Hilton sees the fee contribution for the first full-year of ownership to be about $16 million.