Dev Anand, Managing Partner of The Hotel Property Team (THPT) explores the latest hotel sales and acquisitions and applies his 30 years of experience on current global developments.
The periphery of London continues to attract developers and with the impossibility of finding existing hotels with planning consents, we continue to watch office conversions to hotels. In the Middle East and Africa, Marriott continues to grow and adds more hotels although they still only have 6,500/7,000 hotels out of the 275,000.
London Hotel Group continues unique approach
Originally named Eurohotels, the group over the past ten years has had a policy of developing hotels around the periphery of London, we suspect due to the opportunity of buying the sites at much lower prices than central London and selling the rooms much cheaper than their central equivalents competitors. It’s an interesting move for this pretty low-profile company and with this one in Tooting, its adds to their other London locations of Peckham, Croydon, Wembley and Leyton.
Whilst locations only a London taxi driver would know we say well done for areas that we’re sure have been crying out for a decent hotel. Changing both their name to London Hotels Group and branding the individual hotels under the Ibis Styles and Best Western flags, it is bringing the group more visibility and taking advantages of the brand’s marketing and reservations system, but importantly keeping selling prices low.
5 The Strand changes hands, again
An undisclosed Indian hotel developer, who is understood to be making their UK debut, fought off competition from 21 other bidders to acquire the freehold asset on Trafalgar Square. At a price of £90m the seller, BlackRock UK property Fund, have made a decent uplift on the guide price.
The deal follows a trend for office buildings in the West End to be targeted for conversion into a hotel. Recent targets for change of use have included the former US Embassy, which is being converted into a Rosewood hotel by Qatari Diar and Admiralty Arch which is being turned into a Waldorf Astoria. Sir Michael Kadoorie is creating London’s first Peninsula hotel on the former office building at 1-5 Grosvenor by Hyde Park Roundabout, while Sir Richard Sutton won approval last month to turn Film House on Wardour Street into a hotel.
It has been the case for a while for former offices being converted into hotels, especially for the budget brands like Travelodge and Premier Inn, but now its interesting to see this happening across the market. Although not so recently – The Corinthia was a MOD office (albeit before that a hotel in 1890 odd!). Finding existing hotels (with planning consents) in the capital, to refurb are nigh on impossible…so office conversion to hotel is a fairly obvious move. Also good to have a new developer entering the market – we need the diversity against the dominance of the brands such as Accor, IHG et al.
Marriott adds 30 more signings to its Middle East, Africa portfolio
Marriott will soon have more than 80,000 guestrooms across 21 brands, including the introduction of the Edition, Element and AC Hotels. You could argue that with growth like this, there’s a reason to have 30 brands! I suspect there will some rationalise following the acquisition of Starwood but that will take time. They will probably still have 20+ brands in future years, certainly Marriott’s Moxy, IHG’s Hotel Indigo, Hilton’s Curio and Canopy still deliver a “difference” to the conventional Holiday Inn, Hilton and Marriott.
Marriott, may now the largest hotel group in the world but still only has 6,500/7,000 hotels out of 275,000 hotels (even if you say 150,000 chain hotels) so still nowhere near a monopoly.
New rules from China
In April, Yi Gang, the newly appointed governor of the People’s Bank of China (PBoC) announced a timetable for financial market reforms. Our first questions are how will this affect hotel development a) in China and b) by Chinese companies, outside of China?
The good news is this will open the door for international chains to continue to expand within China… the shame is the curb on the Chinese owning global hotel brands/chains around the world.
Best Western signal market confidence through £214m investment
With 251 independently owned and managed hotels under the Best Western brand in the UK, the figure equates to an estimated £855,000 per property. Independent owners have spent this money, rather than BW…looking ahead, Best Western has forecasted that 2018 is set to be another strong year for hotel investments, with £70m predicted to be invested across Best Western this year alone.
Best Western have done well, from introducing more up-market brands, to kicking out hoteliers who do not keep their hotels up to standards… I seem to remember Best Western UK had near-on 360 hotels when they acquired Consort back in 1999. Sadly, I was around both in 1967 when Interchange started and 1999.
Best Western GB began in 1967 when five independent hoteliers sought to work together to generate referrals, maximise their marketing budgets and increase sales as a result. Would independent hoteliers do the same today? Absolutely! I think hoteliers have demonstrated that banding together can have some very positive effects… from city-wide hotel associations across the brands, to marketing initiatives like Welsh Rare-bits, Ireland’s Green Book, Scotland’s Personal Hotels and so many others.
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