Tag: hotel manager

Riu Rules Out Buying 25% Of Edificio España

3 April 2017 – ABC

Edificio España’s foundations are starting to wobble again. The project backed by the Murcian group Baraka, which announced its plan to buy the skyscraper in July last year, has been hit by two serious setbacks in the last few days.

The first, a problem with Wanda’s documentation, put the brakes on the completion of the sale of the building to the company chaired by Trinitario Casanova. Initially, the two parties had agreed to meet at a notary’s office in Madrid to close the operation, after months of comings and goings, but the Chinese group went to the meeting without the deeds or the annual accounts for the financial year 2016, and so the SPA could not be signed.

According to Baraka, that setback will lead to a delay of three months – at least – in the start of the construction work (which is how long it will take the Chinese group to prepare all the necessary paperwork). Nevertheless, the Murcian company has now suffered an even more important setback. According to sources in the financial and real estate sectors, the hotel chain Riu has decided against investing in the project. The Mallorca-based company was going to acquire a 25% stake in the skyscraper, for which Baraka has agreed to pay Wanda €272 million in total.

700-room hotel

In return, Riu was going to manage the five-star hotel, which would occupy the vast majority of the property. The building was going to have 700 rooms, two swimming pools (one outdoor pool on the roof and another indoor pool on the 16th floor), independent conference rooms and themed restaurants. The rest of the building – four floors – was going to be allocated to retail space and according to Casanova, firms such as El Corte Inglés, the French companies Galerías Lafayette and Printemps, amongst other international brands, had already expressed interest in occupying the space.

However, the whole project is now up in the air following the Riu chain’s decision to not contribute the €68 million that it had committed. The decision will force Baraka to look for a new partner if it is to go ahead with its plans. (…).

Sources in the real estate sector do not rule out the possibility that the “failure to sign” last week was a manoeuvre by the Chinese group to try to thwart Baraka’s purchase of Edificio España and win more time to continuing benefitting from the appreciation in value of the skyscraper. (…).

Meanwhile, the questions surrounding the operation and the project itself are the main reasons that led Riu to decide against acquiring 25% of the complex. However, the Mallorca-based company, which does not have any financing problems, has not ruled out continuing as the tenant of the building and paying a rent in exchange for managing the hotel. (…).

Original story: ABC (by Miguel Oliver and Marta R. Domingo)

Translation: Carmel Drake

B&B Hotels Plans To Double In Size By 2019

26 January 2017 – Expansión

B&B Hotels is putting its foot down on the accelerator in Spain and wants to double its size in the country over the next three years. The French hotel group, which is owned by the private equity fund PAI Partners, currently operates 20 hotels in Spain following its purchase of the low-cost chain Sidorme last October. It is planning to grow its portfolio to 40 hotels by the end of 2019, according to Jairo González, CEO at B&B Hotels for Spain and Portugal.

“PAI Partners have owned B&B Hotels since March 2016 and they expressed their interest in Sidorme immediately”, said the Director. B&B Hotels has operated four hotels in Spain since 2015 and added 15 assets to its portfolio last year through the purchase of Sidorme. Moreover, in January, the chain incorporated a new hotel in Vigo.

The private equity fund’s commitment to Spain is “clear”. “The idea is to open five hotels this year and to commit to opening another five in the future. Our plan is to open 20 more hotels between now and the end of 2020, which would mean doubling our current operations”, said González.

Moreover, the company wants to make its debut in Portugal. “It is a very interesting market and it is perfect for a product such as ours. We want to open our first hotel in the country during 2017”.

Last year, the company recorded turnover of more than €20 million in Spain and an EBITDA of more than €5 million, which represented a two-fold increase compared to the previous year. “The forecast for this year is to achieve growth of between 20% and 30%. Our size still allows us to do that”, said González.

And he added: “Rapid growth generates a certain degree of chaos, which, if channelled in a productive way, permits a very positive vibrant effect, but, otherwise, is self-destructive”.

The company’s plans also include selling the owned hotels it inherited from Sidorme – eight of the twenty assets in its current portfolio – to focus on the management of its assets. The company manages almost 3,000 rooms with a RevPAR (average revenue per available room) of around €30.

In terms of the tourist apartment business line, the company will analyse any new opportunities that fit with its strategy. “We see this business as an opportunistic option. If we come across operations such as the one on Calle Fuencarral, 46 (in Madrid), we will be delighted to proceed, but we are only interested in buildings that are close to existing hotels so that they can complement the existing products”, added the Director.

Sidorme currently operates apartments on Calle Fuencarral, 46, which are located just a few metres from a Sidorme hotel on the same street.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Palladium To Invest €450M In New Openings & Renovations

23 January 2017 – Cinco Días

Palladium, the hotel group controlled by the Matutes family, is planning to invest more than €450 million in new openings and renovating its existing establishments, both in Spain as well as in the Caribbean.

The hotel chain, which recorded a turnover of €558 million in 2016, up by 14% compared to the year before, said that it had completed a good year. It also appeared optimistic about the performance of the holiday market in Spain this year, especially in the Balearic Islands, where it has a larger market share.

Abel Matutes Prats, CEO of the company, said that the firm’s growth strategy in terms of number of hotels now involves managing establishments owned by third parties. “We are ready to grow quite a lot in the urban and holiday segments as a hotel manager”, he said.

The company, which has signed an agreement with Hard Rock to bring the hotel brand to mainland Spain – the US firm already has two establishments on the islands, one in Ibiza and another in Tenerife – acknowledges that it has some plans on the table that have not been finalised yet. Not so long ago, Hard Rock was mentioned as the best positioned player to manage the hotel in Edificio España in Madrid.

“There are a couple of hotels in the pipeline, but nothing has been decided yet”, said Matutes Prats, who defends this alliance as “a well-matched marriage”, which is choosing to focus on its latest addition, the opening in Tenerife, at the moment, but which is not ruling out future developments in urban destinations.

The businessman highlights the arrival of Palladium in Asia. “One day we will have to make the jump, but right now it does not form part of our plans. When we move over there, it will be to launch something big”, he said.

Original story: Cinco Días (by L.S.)

Translation: Carmel Drake

Which Hotels Are Most Sought After By The Socimis?

22 June 2016 – Hosteltur.com

Javier Arús, Head of Investments at Hispania, spoke at a conference last week entitled “Spain: Hotspot for international hotel investment”, organised by the Real Estate Alumni Club of Instituto de Empresa at the IE Business School.

There, he highlighted that the number of operations involving asset repositionings are on the rise, such Hispania’s acquisition of the Ibizan hotel chain San Miguel last week for €32 million. That deal involved the purchase of three mid-range hotels in Ibiza, where significant investments will be made to reposition the properties and convert them into premium assets. This type of operation, “with hotels in very attractive destinations and excellent locations, allows us to develop new products, almost from scratch, and obtain very significant resturns on our investments”, said Arús.

The Head of Investments at Hispania also spoke about the contractual relationships that exist between the Socimi and the operators of the hotels it has acquired to date. He stressed his firm’s preference for mixed lease contracts, which guarantee a minimum level of rental income and offer a variable rental income component to complement the fixed revenue stream. (…).

Meliá’s commitment

Meanwhile, Ángel Luis Rodríguez, Vice-President of Portfolio Management at Meliá Hotels International confirmed that the hotel chain is not currently entertaining the possibility of structuring its assets under a Socimi framework. Rather, the firm has committed itself to the creation of a very specialised real estate manager within the existing company structure, without any need to legally separate the hotel manager’s assets. Moreover, it is focusing its efforts on investing in technology and in core assets. 80% of the hotels in its portfolio operate under management frameworks.

Rodríguez agrees with Javier Arús that there are excellent opportunities to be had from “measured” repositioning of vacation hotel assets. By way of example, he described Meliá’s Calviá Beach project and highlighted the increase in value and quality that it has represented for a tourist destination such as Magaluf. There, the chain, which operates 3,200 rooms, has adopted a deliberate strategy that has allowed it to increase RevPar (revenues per available room) in the area by between 70-80% in a short period of time and with a very limited Capex investment.

Its brand-focused strategy is allowing the company to “enjoy a ‘virtuous circle’: brand strategy + investment in repositioning = increase in ARR (average room rate) and RevPar – Greater client satisfaction and loyalty – Increase in asset value – Better segmentation of customers – Higher direct sales – Higher Returns”.

The three speakers (Javier Faus, President of Meridia Capital also spoke), all experts in the hotel sector, agree that Spain may be able to maintain the level of growth in the hotel sector, if its supply is renewed and updated to reflect the expectations of international tourists, who are genuinely very fond of our country. They also highlight the importance of professionalising the operation of assets and investing in technology to deepen client knowledge and loyalty.

Original story: Hosteltur.com

Translation: Carmel Drake