Transat Invests $55 Million for Stake in Five Properties Owned by Spain’s H10 Hotels

Canadian tour and airline operator Transat A.T. Inc. will spend $55 million to team up with H10 Hotels of Barcelona in a joint venture to operate five hotels in Mexico and the Dominican Republic.

The deal, the largest in Transat’s history, will see it take a 35 percent stake in the hotels, currently owned by H10 Hotels. It has the option to increase that stake to 45 percent at market value within five years of closing.

The agreement allows Transat to achieve its goals of securing a number of quality hotel rooms in key destinations, increasing its control over the vacation products it sells and improving the company’s profitability, he said.

Mexico, Dominican Republic and Cuba represent 80 percent of Transat’s sun package sales. The purchase price includes an undisclosed amount of debt. Transat plans to pay for the deal with cash and its credit facilities.

Starting in 2009, the Montreal-based company –which also operates the Air Transat charter airline and numerous other travel-oriented businesses- expects the hotel joint venture will generate after-tax earnings of 15 percent. Two of the five hotels are expected to open in December.

The expansions will be in areas such as Mexico, Jamaica and Central America. However, it has no plans to expand its sizeable business in Cuba by building new hotels.