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WSJ: MGM Resorts acquires 50% stake in boutique hotel operator Sydell

Las Vegas-based hospitality and gaming company MGM Resorts International entered boutique hotel business by acquiring a 50% stake in New York-based Sydell Group LLC, in a bid to diversify its business and tap a younger demographic, The Wall Street Journal reported Aug. 22.

The move is MGM's first acquisition of stake in a hotel operator that is not connected to gambling. Financial terms of the transaction were not disclosed.

MGM Resorts bought the 50% stake from Ron Burkle, head of private equity firm Yucaipa Cos. LLC. Burkle, however, will remain connected to Sydell through a number of ownership stakes in some of its hotel properties, according to the Journal. Sydell operates hotels brands NoMad, LINE, Saguaro and Ned in cities such as New York, Los Angeles and London.

Sydell CEO Andrew Zobler, real estate investor Square Mile Capital Management LLC and other partners own the rest of the boutique lodging group, the news outlet reported.

The acquisition of Sydell "is part of the next evolution of our growth opportunities," an MGM representative reportedly told the Journal. Sydell's youth hostel brand Freehand reportedly was sold to Queensgate Investments LLP for $400 million in July.

Zobler reportedly said the deal will give more clout to his company when bargaining for commissions with online travel agents and will allow access to a wider distribution network. Zobler will remain as Sydell's CEO.

MGM and Sydell did not immediately respond to S&P Global Market Intelligence's requests for comment.