Recent hotel deals and news – The Hotel Property Team

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.

Minor International (MINT) have come a long way since 17-year-old William E. Heinecke founded the company in 1967, to this year when they buy 25% stake in NH Hotels (and others!). We explore the hotel construction pipeline across Europe, ask if the UK will ever see a strike like the one in Vegas and ponder who drives the trends in neighbours. Explore this and more below.

Minor Group buys HNA’s 25% stake in NH Hotels, wants to own 55% of Spanish Chain

Minor International (MINT) has reached an agreement with HNA Group to purchase an equity stake of 25.2% (on a fully-diluted basis) in NH Hotel Group in a two-tranche transaction valued at EUR 619 million. The purchase follows MINT’s earlier purchase of a 9.5% shareholding (on a fully-diluted basis) in NH Hotel Group.

MINT really don’t hang around… acquisitions in recent years include Portugal’s Tivoli Hotels, a stake in London’s Corbin & King restaurants and others. This gives them 161 hotels in 26 countries with its own brands as well as under Four Seasons, Marriott and St. Regis.

Why the need for speed? Our guess is its coming together for them since their inception in 1967 when William E. Heinecke, then only 17 years old, founded Minor Holdings – the name being a nod to the budding entrepreneur’s age. In the years that following, Bill expanded Minor across a variety of industries by creating innovative brands and strategically acquiring companies to fortify the portfolio. 1978 marked their first hotel venture, the Royal Garden Resort in Pattaya. Since then the Minor Hotels team has grown the hospitality enterprise into an international leader, currently boasting over 20,000 rooms across 161 hotels in 26 countries. Dillip Rajakarier joined as CEO in 2011 having served as CFO of what was then Orient Express Hotels and comes with a strong financial pedigree.

Capella Singapore Hotel to Host Trump-Kim Summit: 6 Things to Know About the Sentosa Hotel

Undoubtedly Capella Singapore Hotel which benefit from hosting the recent USA-North Korea summit, as well as also benefiting from having Disney as their neighbour.  The sprawling and secluded hotel in Sentosa, opened in 2009, was designed by renowned British architect Norman Foster. It was restored from buildings that used to house the British officers of the Royal Artillery and their families in the 1880s. It’s 112 guestrooms and villas face out onto lush vegetation and the South China sea.

The Capella (meaning peace and tranquillity in Malay) Hotel Group is owned by the Kwee family of Pontiac Land Group. The brand is now expanding across the region, with upcoming hotels under the Capella brand in Ubud, Bangkok, Sydney and the Maldives. There are already Capella hotels in Shanghai, the German city of Dusseldorf and Marigot Bay in Saint Lucia.

Freehold Owner of The Athenaeum to Develop Lifestyle Hotel in Soho, London

Sir Richard Sutton Settled Estate, the freehold owner of the Athenaeum and the Sheraton Grand London Park Lane hotels, has submitted plans to transform three buildings in London’s Soho into a high-end lifestyle hotel.

The six-storey hotel will have two ground-floor restaurants, one stand-alone and one within the hotel, the latter of which will have 160 covers in the restaurant and 95 in the bar. As well as also featuring a 224-cover rooftop restaurant and bar.

Sir Richard Sutton Settled Estates, which owns and manages properties on behalf of the Sutton family, plans to redevelop the buildings which currently serve as offices, subject to planning permission. The proposals suggest retaining the masonry and art deco elements of the existing buildings with new build elements at the rear.

This area of London’s Soho has really transformed over the years, with the odd sleazy club still left, and the sad demise of the Marquee Club – the haven of Rhythm & Blues in the 60s and 70s. When you look back it was all started by Paul Raymond who turned from strip-club owner to property magnate and publisher. This was followed by upmarket hotel land developments by Kit & Tim Kemp (The Ham Yard and The Soho hotels), Bev King (Z Hotels), Mark Fuller (Karma Soho Sanctum), Greg Nadler (The Nadler Soho) and others.

The interesting question to ask is do hotels drive the transformation of boroughs or do they follow trends by others of indeed councils? Some may argue councils and their planning boards are a law unto themselves! It was not so many years ago when Westminster had a complete ban on new hotels.  Barcelona in January 2017 also banned all new hotels in the city centre. In a small area encircling the city centre, new hotel beds will be permitted, but only to replace those in hotels that have closed. In Barcelona’s suburbs however, new hotel beds will be permitted, but only under strictly limited conditions—land that has previously been earmarked for housing, for example, will be completely off limits.

Short of ordering current hotels to close, the new rules are arguably as tough as the city can get.

Over the next decade or so, the idea is that hotel numbers in this area will steadily decrease, leaving the streets to return to their former role as a promenade and shopping space for locals!

Germany Leads Europe’s Hotel Construction Pipeline; London Ranks as Top City

Analysts, Lodging Econometrics, have issued a new report that the top countries in the Europe Construction Pipeline by project count are:

Germany with 246 Projects/47,927 Rooms
United Kingdom with 246 Projects/36,585 Rooms
France with 121 Projects/13,618 Rooms
Russia with 80 Projects/15,520 Rooms
Poland with 80 Projects/12,468 Rooms
Portugal with 80 Projects/8,310 Rooms
Spain with 79 Projects/11,457 Rooms
Turkey with 70 Projects/11,278 Rooms

Cities in Europe with the largest pipelines by room count are:

London with 78 Projects/13,601 Rooms
Dusseldorf with 39 Projects/8,461 Rooms
Frankfurt with 29 Projects/6,174 Rooms
Hamburg with 27 Projects/5,934 Rooms
Warsaw with 30 Projects/5,916 Rooms
Munich with 26 Projects/5,664 Rooms
Moscow with 25 Projects/5,628 Rooms
Istanbul with 30 Projects/5,368 Rooms

Interestingly Lodging Econometrics also tell us that Extended Stay product accounts for 27% of ALL the hotel project under construction at this time.

By the end of 2018, 320 Projects/33,961 Rooms are expected to open in the extended-stay segment in the U.S., with another 309 Projects/33,087 Rooms in 2019.

Is the bottom line that all is healthy in Europe (for hotel development)? Poland is maybe the one stat that surprises us. The next question is can cities like London (actually all of them) fill these new beds? Especially when such cities have already had near on 9,000 new beds each year for the past few years. The other side is can we fully staff these new properties.

UK Hospitality reported in 2017: “The hospitality industry is the 4th biggest employer in the UK, accounting for 3.2m jobs through direct employment in 2016, and a further 2.8m indirectly. The industry generated over £73bn of Gross Value Added directly to the UK economy, and a further £87bn indirectly.” It’s a powerful sector but its needs to be ready.

Caesars and MGM Reach Deal in Vegas Strike

UNITE HERE’s Culinary and Bartenders Unions have reached tentative agreements with MGM Resorts and Caesars Entertainment in a bid to avert a strike impacting casinos on the Las Vegas Strip. There are some 15 Vegas properties the union has reported it is still in negotiations with, such as Four Seasons Las Vegas, Golden Nugget and Golden Gate Hotel and Casino.

The union’s contract with these properties, as well as those owned by MGM and Caesars, expired June 1. On May 22 the union had voted to authorise a strike after the expiration of their contracts as negotiations over issues including compensation, technology and sexual harassment continued.

UNITE HERE said that its last major strike, which took place in Atlantic City in 2004, lasted 34 days. The last major strike of this kind in Las Vegas took place in 2002, when 25,000 workers went on strike. Another citywide strike in 1984 lasted for 67 days.

Just goes to show there are some fundamentals that hotels cannot ignore – staff, guests, weather, civil unrest and the economy.

Could this happen in UK? I guess the joy in the UK is that hotels are largely not unionised, certainly not to the extent that it is in the USA. A Fabian Society and Community study a few years ago shows that the fastest-growing industries such as hospitality have the lowest membership levels. They found membership density in UK hospitality at just 2.5% so certainly doesn’t seem to be anything of this nature in the UK anytime soon.