HVS EMEA Hospitality Newsletter – Week Ending 14 October 2011

The latest hospitality news from Europe, the Middle East and Africa

From The Hills To The Capital

Middle Eastern investor Capital Hill has acquired the 150-room Sanderson and 204-room St Martins Lane hotels, in London, from US-based Morgans Hotel Group for £192 million (£542,000 per room). As well as operating the hotels, Morgans held a 50% stake in the joint venture that owned both properties. The transaction is expected to be completed before the end of 2011. Morgans will continue to operate the hotels, which are to undergo a £20 million renovation, under long-term management contracts and London-based Cedar Capital Partners will asset manage the properties. HVS London was pleased to have provided valuation advice in connection with this transaction.

Accor Sells Seven In France

Accor has sold seven Suite Novotel hotels across France to a consortium of French institutional investors for €77 million, under a sale-and-variable-leaseback deal. The transaction, which will be finalised before the end of the year, is part of Accor’s asset management strategy, which aims to reduce the group’s adjusted net debt by €2.2 billion by 2015. The sale also includes an €8.7 million renovation programme, €4.7 million of which will be financed by the properties’ new owner.

A New Hotel In The UK For Crimson

Independent UK-based company Crimson Hotels Group has acquired the Hesperia London Victoria Hotel from Hesperia Hotels for around £55 million. Crimson now plans to refurbish the 212-room hotel before it is rebranded as a DoubleTree by Hilton in January 2012, under a franchise agreement with Hilton Worldwide. This will be the group’s second DoubleTree by Hilton property. Crimson currently owns and operates 12 hotels across the UK, Portugal and Dubai.

Costes Gets A Whole Lotta Lotti

Spanish group NH Hoteles (NH) has reportedly sold its remaining 67% stake in the Hotel Lotti in Paris, France, to Hotel Costes for €71 million. NH had previously sold Hotel Costes 33% of the business for €35 million. NH will continue to manage the hotel over the next two years. The transaction will provide the group with a capital gain of €7.5 million.

New Owner For The Hoxton Hotel

Morgans Hotel Group has got together with Invesco Real Estate to purchase the 208-room Hoxton Hotel in London for around £70 million. It is reported that the duo have been picked as the preferred bidder for the hotel.

Southern Sun’s Amazing Grace

African hotel group Southern Sun has purchased the Grace Hotel and office building in the suburb of Rosebank in Johannesburg, South Africa, from Hyprop Investments for a reported ZAR85 million (€7.8 million), subject to approval from the Competition Commission. The 73-room hotel closed at the end of August when its operator failed to meet the lease obligations. Southern Sun plans to rebrand the hotel and reopen it in the first quarter of 2012. The acquisition brings Southern Sun’s portfolio of hotels across Africa, the Middle East and the Seychelles to 95. Southern Sun’s managing director, Graham Wood, said that the purchase “is consistent with our business philosophy to own and operate our own hotels.”

Going, Going…Gone!

London-based company Metrotel has sold the Premier Inn Hammersmith Hotel and the adjacent Ravenscourt Arms public house, in London, to a private investor for an unnamed price. A former office tower, the 119-room, 14-storey hotel was on the market with a guide price of £10 million. Also reported this week was the purchase of the 200-room Ramada London Heathrow and the 201-room Ramada Bristol City by UK-based Focus Hotels for an undisclosed sum, after the two properties went into administration at the end of September. Focus has also taken over the management of both hotels. This deal brings Focus Hotels’ portfolio of three- and four-star hotels in England up to 14.

Hilton Arrives In Azerbaijan

Hilton Worldwide has made its debut in Azerbaijan with the opening of the 309-room Hilton Baku this week. The new-build, 25-storey hotel, which overlooks the Caspian Sea in the country’s capital city, is the product of an agreement between Hilton and ISR Capital Management.

Travelodge Banks On Success In London

Budget chain Travelodge has opened its 486th hotel. The Grade II-listed, 75-room London Bank Travelodge, which was developed with an investment of £7.5 million, has an illustrious location near to the city’s Bank of England building. This recent opening kicks off Travelodge’s £223 million expansion plan, which will see it open 26 hotels in London over the next two years, ten of which will arrive in time for the Olympic Games next year. The group’s latest offering has been a triumph – “The London Bank Travelodge opening has outperformed all new hotel openings in our company’s 26-year history,” said Guy Parsons. “This clearly demonstrates the strong consumer demand for good quality, low cost accommodation in the City of London,” he added.

Park Inn By Radisson To Debut In Ukraine

Rezidor Hotel Group has signed a deal with Ukraine-based real estate group Esta Holding to open its first Park Inn by Radisson hotel in Ukraine. The Park Inn by Radisson Donetsk is currently under construction on the site of the former Kyiv Hotel in the city of Donetsk, in the east of the country, and is expected to open in the second quarter of 2012 with 175 rooms. Esta Holding purchased the site in 2010 for UAH24.6 million (€2.2 million). “The Park Inn Donetsk will be the first internationally managed three-star hotel in Ukraine bringing the expertise and high standards of affordable accommodation to the hospitality market,” said Dejan Djordjevic, managing director of Esta Holding’s hospitality business. This isn’t Rezidor’s first foray into Ukraine – the group already has two Radisson Blu hotels in operation in the country and another one under development.

Tune’s Second Song For London

Malaysian-based Tune Hotels is planning to open the 183-room Tune Hotel Liverpool Street in January 2012. Part of a £100 million project to develop 15 Tune hotels in the city, this is Tune’s second hotel in London, and the UK as a whole, alongside the 79-room Tune Hotel Westminster.

A Spanish Affair For Romantik

Continuing its tour d’amour across Europe, Romantik Hotels & Restaurants has arrived on Spanish shores. The Frankfurt-based group has opened the 12-room Romantik Hotel Cases de Son Barbassa in northeast Majorca and the 25-room Romantik Hotel S'Olivaret on the western side of the island, its first hotels in the country. Romantik isn’t stopping here though; it plans on having a lasting relationship with Spain and aims to reach 15 hotels in the market over the next two to three years.

Public To Cross The Atlantic

American Hotelier Ian Schrager could be bringing his new brand, Public, across the Atlantic Ocean to London – the Ian Schrager Company, Westmont Hospitality and Grove International Partners have reportedly joined up to bid £75 million for the 196-room Crowne Plaza hotel in London’s Shoreditch area, and rumour has it that this could be the UK’s first Public. The brand made its global debut this week with the opening of the 285-room Public Chicago, in the US, and two more sites are planned for New York.

Gladen’s Tidings

The news from Spain by Esther Gladen, Business & Market Intelligence Analyst, HVS Madrid. Second Hilton opening in Seville: after the opening of the Waldorf Astoria Sevilla at La Boticaria, Hilton Wordwide has signed a management agreement with Banco Pastor for its second property in Seville. The 11-storey, four-star Hilton Garden Inn Seville will be the first of its brand in Spain and it is scheduled to open in summer 2012 in the Torneo business park. New Room Mate hotel for Barcelona: The construction of the new three-star property on calle Fontanella in Barcelona is expected to be finished in 2012. The hotel will have 66 rooms and is scheduled to open on 1 June. HM Hotels has another project in Majorca: the group is working on the conversion of a building on calle Balanguera, Palma de Majorca, into a 40-room, four-star hotel. The work is scheduled to be completed by the end of 2012.

Absolute Share Price Performance Over the Past Week – 6-13 October 2011

Meliá Hotels International – Meliá's five-year Credit Default Swap continued a significant uptrend over the past week.

InterContinental Hotels Group (IHG) – IHG increased on high volume for a fourth consecutive day, a four-day rise of 11.3%.

Accor – Accor's five-year Credit Default Swap rose above its Moving Average Spread.

For the latest in the hospitality industry, please visit: http://www.hvs.com. You are also welcome to contact the following personnel.

Russell Kett, Managing Director – HVS London (@russellkett)rkett@hvs.com
Charles Human, Managing Director – HVS Hodges Ward Elliottchuman@hvshwe.com
Tim Smith, Director – HVS Londontsmith@hvs.com
Chris Martin, Director – HVS Hodges Ward Elliottcmartin@hvshwe.com
Demetris Spanos, Managing Director – HVS Athensdspanos@hvs.com
Hala Matar Choufany, Managing Director – HVS Dubaihchoufany@hvs.com
Christopher Mumford, Managing Director – HVS Executive Search (@ChrisMumford)cmumford@hvs.com
Philip Bacon, Managing Director – HVS Madrid and Managing Director, EMEA & Asia – HVS Shared Ownership Servicespbacon@hvs.com
Saurabh Chawla, Director – HVS Asset Management and Strategic Advisoryschawla@hvs.com
Louise Fury, Senior Editor and EMEA Hospitality Newsletter Author – HVS Londonlfury@hvs.com