Tag: Minor Hotels

Spanish Hotels Change Hands As Tourism Booms

16 August 2018

Spain is a tourist country par excellence: beaches, sun, good weather and hotels. It is a country where tourists can find a comfortable place to spend their holidays, while at the same time, investors see an interesting potential for profits. In this manner are the parallel tales of the splendour of Spain’s tourism interwoven with the non-stop action in the local hotel sector real estate market.

Last year, investments reached 3.750 billion euros, according to real estate consultancy CBRE, a record figure that gives an idea of the market’s momentum. The frenetic pace of acquisitions didn’t stop for a rest this summer either, as the sector awaits the result of the Thai International’s takeover bid for NH Hoteles.

The hotel scene is undergoing a paradigm shift and the business model that has been used since the 1980s, where the property owner and hotel operator were the same, is moving towards a more Anglo-Saxon profile, where the owner is an investor, and lifelong hotel sector professionals are primarily responsible for management. The sector is still highly fragmented and dominated by individual owners and independent managers (55%), although their relative participation is decreasing. Funds, socimis and family offices have gained prominence in recent years and are responsible for most of the operations currently being executed, to the detriment of traditional groups. Consequently, 57% of the total invested in the year up to June corresponded to that group of investors, compared to 40% for the traditional hotel chains.

The reason for the change is, again, the bursting of the real estate bubble. Many hotel owners experienced difficulties and, in some cases, were unable to cope with their debts to banks, which in many cases took over the assets; then came the venture capital funds that, honouring their nickname – vultures –, took advantage of the situation to snap up those hotels at firesale prices. The funds then follow a familiar path after that, and the same story is repeated in other segments of the real estate market: the funds invest in the completion of moribund projects or to upgrade older assets, run the businesses at a good profit until they find an opportunity to unload their investment, obtaining attractive returns in the process.

“[The funds] obtain annual yields of around 6.5-7% and aim to achieve between 12% and 15% with an eventual sale of the asset,” says Bruno Hallé Boix, founding partner of the consultancy Magma Hospitality Consulting.

Divestment will be the next phase of the current cycle, but for now, market players are focusing on repositioning the businesses and their subsequent consolidation. Investment forecasts for 2018 are positive, although they are not expected to return to the highs of last year. In the first semester of this year, the total volume invested shrank by 55%, to 960 million euros. In that same period, 70 hotel assets were transacted, 8,500 rooms were built, together with another 1,800 in as yet incomplete buildings, lots and projects sold.

“It is becoming harder every day to find good assets, that’s why it’s a good time for skilled opportunity seekers,” Mr Hallé Boix stated.

Mergers and acquisitions

One of the most important transactions this year starred Blackstone, which has established itself as Spain’s hotel giant after finalising its takeover bid for Hispania. The US fund already owned more than a dozen assets stemming from a previous real estate transaction with Banco Santander and HI Partners. With its acquisition of Hispania, Blackstone added another 46 hotels and more than 13,100 rooms to its portfolio.

With that operation over, all eyes are now on NH Hoteles. The chain has been on the block for months after an unsuccessful attempted merger with Barceló, and so far, Minor International seems likely to take the prize. The Thai company, also planning on creating a hotel sector behemoth, is offering 6.4 euros per share the Spanish chain, which had a relatively cool reception.

While awaiting the outcome of this latest page-turner, almost no one is ruling out additional transactions in the coming months. 83% of Spanish and international chains surveyed for Magma Hospitality’s Hospitality Hotel Management 2018 study demonstrated an interest in moving ahead with possible mergers or acquisitions with other hotel groups in Spain during 2018 and beyond. At the same time, the growth of specialised socimis will continue to add dynamism to the sector.

For investors, including both socimis and the traditional operators, holiday resorts are seen as the next big bet, accounting for 78% of investments in the first half of the year, compared to the 22% that went to urban hotels. Baleares (27%), Canarias (26%) and Andalucía (9%) were the main targets of regional investment, with others such as Madrid (5%) and Barcelona (4%) following far behind, according to CBRE.

In 43% of the cases, the average sale price for the assets valued the hotels at between 60,000 and 120,000 euros per room, according to the report. At the same time, there was an increase in acquisitions where buyers paid more than €120,000/room, another example of the boom in the sector.

Original Story: El Mundo – María Hernández

Translation: Richard Turner

 

NH Breaks with AMResorts After Minor’s Entry

28 August 2018

The alliance to incorporate the subsidiary of Apple Leisure is frustrated in the middle of the Thai firm’s takeover bid.

The strategic alliance between the NH Hotel Group and the US-based Apple Leisure Group to jointly operate holiday hotel complexes in Europe, announced last May, has ground to a halt in the middle of the Thai group Minor’s takeover bid for 100% of NH.

Market sources explain that Minor’s participation in the firm, where it already controls 44.75% of the capital, has brought the alliance, which should have been signed at the end of last July, to an abrupt end.

The agreement involved the arrival of AMResorts, one of the subsidiaries of the US holding company, in Europe and opened the door for NH to expand in the holiday segment together with the North American company. The alliance was another step in the relationship that AMResorts had maintained with NH since 2011 when both companies established a similar model to operate three complexes in the Dominican Republic.

Under the agreement, currently halted, AM Resorts would have been in charge of brand management and the marketing of the resorts, while NH would maintain operational management. The first complexes in Europe were scheduled to open during 2019.

The American group planned to market three hotels with the AMResorts brand in Lanzarote, Fuerteventura and Mallorca from 2019. These hotels are owned by Hesperia and are managed by NH.

“The resorts will be brand conversions of existing hotels, which will be remodelled to adopt the standards of the AMResorts brands with which they will operate,” the companies indicated at the time.

Also, the alliance envisaged a greater partnership when evaluating “additional opportunities for conversions and new constructions,” that would allow the expansion of AMResorts in Europe and NH to extend its footprint in vacation resorts.

However, Minor’s participation in NH has put an end to the agreement.

The Thai group controls 1,75516,807 shares of NH, equal to 44.75% of the share capital of the Spanish firm and has launched a takeover bid for the rest, although it intends to control between 51% and 55% of NH and keep the group listed.

Alternatives

After the takeover by Minor, NH contracted Bank of America Merryl Lynch to evaluate the offer and look for alternatives.

So far, no white knight has appeared at NH’s door, except for Hyatt, which, despite having expressed interest in the Spanish network, has ruled out a counter-takeover bid, believing that the operation has little prospect of success with Minor controlling more than 44% of its capital.

The Thai group’s bid was accepted by the CNMV on July 19. After the approval of its shareholders and once the market’s supervisory body approves the deal, Minor expects to complete the transaction in October 2018.

Original Story: Expansion – Rebecca Arroyo

Translation: Richard Turner

 

Minor Buys 26.5% of NH Hoteles from HNA for €622M

5 June 2018 – El País

The Thai company Minor International has purchased the Chinese conglomerate HNA’s 26.46% stake in NH Hotel Group for a total of €662.3 million, and has whereby become the largest shareholder of the Spanish hotel group, according to a statement filed on Tuesday by the Chinese company with Spain’s National Securities and Markets Commission (CNMV).

The operation has been divided into two tranches. On the one hand, HNA has sold a package of 65.85 million shares in the Spanish group, representing 17.64% of NH’s share capital, at a price of €6.40 per share, for a total of €421.4 million. That operation is expected to be closed by the middle of this month.

On the other hand, the Asian group has sold 32.93 million shares, representing 8.83% of NH’s share capital for €6.10 per share, equivalent to a total price of €200.9 million. Nevertheless, this second operation is subject to the execution of the first and is expected to be closed by the middle of September.

Forced takeover

Currently, Minor holds a 10.22% stake in NH, although it only holds 1.66% in shares. It holds the remaining 8.56% through financial instruments. When its acquisition of HNA’s stake is completed, Minor will be obliged to launch a takeover bid for 100% of the Spanish hotel group, as established by the law, as it will exceed the threshold of 30% of its share capital. The minimum price of that bid will have to be €6.40 per share.

Minor acquired its first stake in NH a month ago, with the purchase of 8.6% from the fund Oceanwood for €196 million, when it paid exactly the same price (€6.40 per share) that it will now pay HNA. Following that operation, Minor explained that “no management changes are expected” in NH in relation to its investment in the company, but it left the door open to expand its stake and, therefore, take absolute control over it.

Minor International Public Company Limited (MINT), the company that operates the Minor Hoteles brand, has 160 hotels, 2,000 restaurants and 400 outlets, most of which are located in South-East Asia. The firm’s market capitalisation amounts to around €4 billion.

Original story:El País (by Ramón Muñoz)

Translation: Carmel Drake