HVS EMEA Hospitality Newsletter – Week Ending 12 November 2010

A PRE-CHRISTMAS PARISIAN SALE | Starwood Capital has sold the Hôtel de Crillon, in Paris, France, to a group of Saudi Arabian investors, rumoured to be linked to the Saudi royal family, for approximately €250 million. The sale is reportedly in the final stages, and it does not include the €100 million refurbishment programme that is expected to take place after the deal is complete. Built in 1758 as a palace for Louis XV, the building was purchased by the Comte de Crillon in 1788 and thus it acquired its famous name. It was home to the Crillon family up until 1907, apart from a brief sojourn as a lodging house and café during the French Revolution, and in 1909 it was transformed into a hotel. It is rumoured that the 147-room hotel will be managed by Kempinski Hotels, which would mark the Swiss hotel group’s entry into the French market.

GOODBYE BERNERS...| Marriott International has bought The Berners Hotel, in London, UK, for an undisclosed sum from JJW Hotels & Resorts, which went into administration earlier this year. The US-hotel group has plans to relaunch the property under its luxury boutique EDITION brand. For the next 18-24 months, the 193-room hotel, which was on the market for more than £60 million, will be redesigned by award-winning hotelier Ian Schrager and will undergo a complete renovation before opening as the London EDITION. Commenting on the transaction, Arne Sorenson, Marriott’s president and chief operating officer, said: “We are delighted to acquire Berners. It is a perfect property for an EDITION hotel in London. With its great location and beautiful façade, the building is a perfect canvass for creating a true work of art.” Once completed, this development will be the UK’s first EDITION property.

…HELLO WELLESLEY| November 2012 is the date set for the opening of the 36-suite Wellesley townhouse hotel, in London’s Knightsbridge. A luxury operator is being sought for the development, which, it is rumoured, is aiming to be London’s first six-star hotel. The building, previously a mixed-use restaurant and office block, is owned by City and Country Hotels, a subsidiary of London-based Arab Investments, and it is being developed by Rhimesong Corporation. The total cost of the six-storey project is reported to be £36 million.

INVESCO’S NEW HOTEL FUND| Global investment company Invesco plans to raise up to €500 million for a fund which will acquire mid-market, upscale business hotels in Europe. According to Invesco’s Marc Socker, director of hotel fund management, it is likely that the new fund, Invesco Real Estate Hotel Fund II, will have raised the capital by the end of 2011; the capital raised will be institutional money from investors, such as pension funds. Invesco’s previous hotel fund, which raised €350 million, closed four years ago. According to Mr Socker, new supply of hotels in Europe is at an all-time low. “There’s a huge opportunity in the market for consolidation and conversions”, he said. Invesco’s current hotel portfolio comprises 16 hotels (3,500 rooms) across nine countries.

OOH LA LA MALMAISON | According to The Times, MWB Group Holdings, the parent company of the Malmaison and Hotel du Vin chains, is taking part in negotiations for a management contract for a Malmaison hotel in Paris. The site in question, on Place de Madeleine, currently houses vacant apartments; planning permission has already been granted for conversion to a 64-room hotel and the cost of such a project is reported to be approximately €35 million. There are currently several Malmaison properties across the UK, but the Paris hotel would be the brand’s first foray abroad. However, when it gets to the French capital, MWB doesn’t intend to just rest on its laurels, sipping coffee and nibbling croissants, as the company is also seeking out potential sites in Venice, Rome and Amsterdam.

A TRIBUTE TO 37 | Thirty-seven is the number of plays that William Shakespeare is thought to have written, it is the number of slots in European Roulette and, for all you film fans, it is also the number of Paul Newman's inmate in Cool Hand Luke. Now this auspicious number has been picked by InterContinental Hotels Group to feature in its UK expansion plans – the group revealed this week that it intends to add 37 new hotels to its UK portfolio, as part of a £500 million investment. Ten of the new properties will be in London, including two hotels at the Olympic Village, which are expected to open in 2012, and the 254-room InterContinental London Westminster, which is due to open its doors next month. Other cities earmarked for new hotels include Newcastle upon Tyne, Manchester, Colchester, Birmingham and Glasgow.

TWO NEW ACCORS FOR LONDON | Accor UK & Ireland, a division of Accor, has signed a lease agreement with the McAleer and Rushe Group for two new hotels in London: the 182-room Novotel London Blackfriars and the 297-room Ibis London Blackfriars, which are both expected to open in time for the 2012 Olympic Games. Construction on both developments, which will be adjacent to each other, is to start immediately. It was also announced this week that Accor intends to add another 100 hotels to its portfolio in the UK by 2015. This expansion will include the introduction of its Pullman and M Gallery brands in the country. Commenting on the company’s growth plans, Frederic Josenhans, Accor’s senior vice-president of marketing and brands, said: “We expect [that] more than 80% of the new hotels will be franchised or managed properties.”

DUKES HOTEL TO GO FORTH AND MULTIPLY | On 31 December 2010, the Dukes Hotel in London is to end its four-year association with London-based privately owned company CampbellGrey Hotels. Seven Tides, the owner of the 90-room hotel, reportedly plans to expand the brand across the rest of Europe, the USA and the Middle East under its Seven Tides Hotel Management Division. Seven Tides purchased the Dukes Hotel in 2006 and it is the Dubai-based company’s first international asset.

A JUMEIRAH FOR SYRIA | Dubai-based Jumeirah Group has signed a letter of understanding with Syrian company Souria Holding for the management of a new hotel in Syria. The Jumeirah Abraj Souria, which will include 350 rooms and 100 serviced apartments, is to be developed as part of the Abraj Souria mixed-use project in Damascus, southwest Syria. The 300,000 m² project is expected to take four to five years to complete and will include retail and office space.

UNDERCOVER BOSS UNCOVERED | Four of the hotel industry’s most distinguished senior executives – including a star from Channel 4 Television’s latest series of ‘Undercover Boss’ – will be putting the ‘Challenges and Trends for the Hotel Industry’s Future’ under the microscope at a panel forum at the 5th Annual BAHA Hospitality Finance, Revenue Management and IT Professionals Conference and Exhibition. The conference is on Thursday 25 November 2010, at the Sofitel London Heathrow. The ‘Undercover Boss’ in question is David Clarke, Chief Executive of Best Western Hotels, who will be accompanied by Robert Cook, Chief Executive, Malmaison and Hotel du Vin; Michael Levie, Chief Executive, citizenM hotel group; and Brian Hicks, Director of Revenue Management, InterContinental Hotels Group. Chairing a distinguished panel of hotel investors and lenders will be HVS London’s managing director, Russell Kett. For further details or to book your place, go to www.bahaconference.co.uk.

SOL MELIÁ’S RESULTS FOR THE FIRST NINE MONTHS OF 2010 | Sol Meliá has recorded a profit for the first nine months of 2010 of €71.7 million, an increase of almost 51% on the €47.5 million reported for the same period in 2009. Revenue for the first nine months of the year was reported to be €976.7 million, an increase of 8.5% on 2009. The company’s EBITDA increased by 16.5% to €216.1 million for the first nine months of 2010 and third-quarter RevPAR in major European cities grew by 17.4%. According to a press release, the Spanish company is expecting RevPAR growth in 2011 to reach mid-single digits, providing that recovery continues in its most important markets.

INTERCONTINENTAL HOTELS GROUP REPORTS ITS THIRD-QUARTER RESULTS | InterContinental Hotels Group (IHG) reported a revenue of US$421 million for the third-quarter of 2010, an increase of 5.0% on the same period in 2009. Third-quarter operating profit was US$115 million, a decrease of 7% on 2009; however, the company recorded an operating profit of US$334 million for year-to-September 2010, an increase of 10.2% on the same period in 2009. RevPAR for the EMEA region increased by 9.7% in the third quarter, and average rate rose by 3.1%. The strongest performance was seen in Germany, where RevPAR grew by 22.2%. Commenting on the results, Andrew Cosslett, chief executive of IHG, said: “The quarter saw a return to rate growth for the first time since early 2009, a clear sign that the recovery is gathering pace…While visibility is still limited, business confidence and corporate profitability remain positive and, with supply anticipated to stay below historic levels, industry trends look favourable.”

GLADEN’S TIDINGS | The news from Spain by Esther Gladen, Business & Market Intelligence Analyst, HVS Madrid. Gestión T3 is to manage the Tryp Almussafes, in Valencia; the multiple-brand management company has added the 133-room hotel to its portfolio of ten properties and it has agreed with Wyndham Worldwide to keep the brand. The Hilton Valencia may soon be sold – Continental Property Investment has officially offered approximately €40 million to purchase the 304-room hotel. In order to agree on the details, a meeting will be held next week between the representative of the fund, Lebanese Boutros El-Khouri, and the other parties involved, including the owners of the property, debtors, Eurohypo Bank, and Barceló Hotels. There will soon be a new All Seasons hotel in Madrid; the three-star, 48-room Hotel Prado, in the city’s museum area, will be operated under Accor’s economy All Seasons brand from 1 December 2010.