Tag: NH

NH Early Redeems A Bond Issue To Reduce Its Debt By €100M

31 October 2017 – Expansión

The NH hotel chain has reduced its debt by €100 million after early redeeming the entirety of a debt obligation issue made in 2013. The issue, amounting to €250 million in total, was due to mature in 2019.

NH has explained that the redemption will be performed on 30 November and will be charged against available cash and, temporarily, through short-term credit lines. Following the operation, the company’s long-term gross financial debt will stand at around €740 million.

The hotel group has explained that this operation will allow it to achieve a net interest saving of around €9.6 million between 30 November (2017) and 1 November 2019, the obligations’ maturity date.

“The redemption and cancellation of the obligations represents a significant milestone in the company’s strategic plan, and seeks to reduce the gross amount and average cost of its indebtedness over the long-term, as well as to prolong its average life”, says NH.

Specifically, with this redemption and without considering the temporary use of short-term credit lines, the average cost of NH’s debt will reduce from 4.2% to 3.8%, whilst its average life will lengthen from 4.4 years to 4.7 years.

Moreover, as a consequence of this redemption, the syndicated credit line signed in 2016 for a limit of €250 million will continue to be available in its entirety, and its maturity is extended automatically until 2021.

In this way, NH is finalising the process to refinance its long-term debt and will hold onto a €250 million convertible bond, which is due to mature in November 2018, as medium-term debt.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hispania Invests €190M To Reposition Its Hotel Portfolio

25 September 2017 – Expansión

Hispania is going to invest €190 million to reposition its hotel portfolio between now and 2019 to maximise its value. At the end of the first half of the year, the Socimi managed by Azora owned a portfolio of 39 hotels and 11,059 rooms, most of which are located in the Canary Islands.

Some of the most strategic hotels, according to the presentation to investors submitted by Hispania to the CNMV on Friday, include the Hotel Club San Miguel (Ibiza), on which it is going to spend capex of €50 million; and the Hotel Holiday Inn in Madrid, acquired in 2015 and in whose modernisation, the Socimi is going to invest €34 million. In parallel, Hispania has another €100 million of capex budgeted for other potential projects.

In addition to the investment in the modernisation and repositioning of the establishments in its portfolio to superior categories, Hispania is basing its model on a diversified portfolio of operators – it works with Barceló, Meliá, NH and Vincci, amongst other hotel chains – and it has lease contracts that combine fixed and variable components. Its roadmap, according to the presentation, forecasts achieving cost savings through economies of scale, as well as enhancing direct sales.

Currently, 69% of the revenues from its hotels come through tour operators. Thanks to its asset optimisation strategy, Hispania expects to increase the value to its shareholders by more than €30 million in the Guadalmina and Holiday Inn Hotels. Meanwhile, in the portfolio as a whole, it hopes to generate €60 million of additional cash.

The company, which has not detected any impact on demand following the terrorist attack in Barcelona in August, expects revenues per available room (RevPar) to grow by more than 10% this year.

Original story: Expansión

Translation: Carmel Drake

Hotel Chains Invest €2.5 Billion to Reposition Their Portfolios

23 August 2017

Meliá, Barceló, RIU, NH, Palladium and Iberostar redouble their investments to reach new markets, reinforce the presence of their premium brands and raise prices.

The hotel chains are taking advantage of the boom in tourism and profits from recent years to invest in upgrading their assets. The Spanish groups have launched investments of about 2.5 billion euros in recent years and are planning to increase them further to reposition their asset portfolios, boosting their premium segment to attract clients willing to spend more on better accommodations.

With these measures, the hotel groups are seeking to boost profitability and enhance operational efficiency by focusing more on prices than on occupancy, where they have little room for growth. In addition, companies are looking to enter new markets, diversifying risks should the current cycle change.

One of the most active in the repositioning of its assets has been Meliá Hotels. The company allocated 260 million euros last year to the maintenance and refurbishment of its establishments around the world. The firm has emphasized the improvement of its hotel portfolio in Spain. Specifically, in the last five years, it has invested €500 million with its partners to upgrade its Spanish hotels, of which more than €200 million have gone to Magaluf (Mallorca).

For its part, RIU invested $500 million dollars last year in the purchase, construction and renovation of hotels and plans to allocate more than $400 million in 2017 for the complete renovation of six hotels and further openings. In recent years, the chain has renovated 13 hotels with a cumulative investment of $200 million projects in Spain alone.

Openings

With regards to new openings, the RIU hotel group plans to open its first hotel in Madrid in 2019. The company chose the Edificio España for its arrival in the Spanish capital, where it will invest between €380 million and €400 million, including the price paid to Baraka for the purchase of the asset last June.

Iberostar is another of the hotel groups that has launched an investment program to open new hotels and update some of the establishments in its portfolio. In 2016, it opened hotels in new areas such as the United States and Ibiza. In addition, as part of its policy of reinvesting profits, in 2016 it dedicated more than €90 million to the hotel renovations and plans to allocate more than 300 million euros in partial and total renovations by 2018.

For its part, Palladium has opted to grow in the Caribbean and reposition its presence in the Spanish islands. The hotel group belong to the Matutes family last year allocated 80 million euros to Hard Rock Tenerife and will invest 450 million euros up to 2018 to reposition two hotels in Ibiza, remodel and expand its hotels in Rivera Maya and the open two establishments in Costa Mujeres and another in Cancun, all in Mexico.

Within the framework of its strategic plan, NH invested 200 million euros in the renewal of assets between 2014 and 2016. Investments in Spain accounted for 42% of this figure. As a result of the strategic plan, at the beginning of 2017, one of every five of the group’s rooms belongs to the chain’s premium brands NH Collection and nhow.

Similarly, Barceló has launched a new set of brands and destined an average of 100 million euros per year to reposition its product portfolio.

The Piñero Group’s strategic plan is to upgrade their existing hotels and pursue a consolidation in its main markets through the opening of new establishments. To this end, the chain has invested €50 million in the construction of a new five-star luxury hotel in the municipality of San Miguel de Abona.

Original Story: Expansión – Rebeca Arroyo

Translation: Richard Turner

Hyatt Returns To Madrid To Manage Hotel On Gran Vía, 31

10 March 2017 – Cinco Días

Hyatt is returning to Madrid. The hotel chain is coming back to the capital nine years after abandoning its role as the manager of Hotel Villa Magna. This week, the company has announced that it will manage the future hotel whose doors are going to open at number 31 Gran Vía, a property that is owned by the company Exacorp One, itself owned by the Mexican Díaz Estrada family.

The hotel chain will open an establishment there during the fourth quarter of this year, under the Hyatt Centric brand, according to a statement made this week by the firm. As such, it will become the first establishment to bear the hotel chain’s urban brand in Spain.

The future hotel will have 159 rooms, a restaurant called “Hielo y Carbón” (Coal and Ice) and a roof-top terrace, which will open during 2018. Jorge Díaz Estrada, Director of Exacorp, recognises that “the hotel’s central location, combined with its unique design, will attract business and pleasure travellers alike”.

In addition to this property, Díaz Estrada has entered Madrid’s real estate market with a bang in recent years with the purchase of several buildings. The most iconic property in its portfolio is Apple’s current flagship store in Puerta del Sol. In addition, the firm has acquired properties at numbers 25 and 27 Calle Montera.

Meanwhile, Hyatt’s return represents yet another boost for the hotel sector in the city. A real commitment from the international brands, which will be further strengthened by the arrival of Four Seasons in the Canalejas Complex and the W, which Starwood is going to open across the road. These establishments will encourage more international travellers and will, according to sources in sector, favour an increase in average prices for hoteliers.

In addition, a number of Spanish hotel chains have also strengthened their presence in the area in recent times. In this vein, Barceló has opened a hotel in Torre de Madrid, close to where Riu is expected to manage the future hotel in Edificio España. Meanwhile, NH, will open the doors to its new hotel on Gran Vía at the beginning of next year.

Original story: Cinco Días (by Laura Salces Acebes)

Translation: Carmel Drake

Hispania Acquires Hotel NH Málaga For €41M

13 February 2017 – Expansión

Hispania, the Socimi in which George Soros owns a stake, has purchased a hotel in Málaga from the NH Hotel Group for €41 million. The establishment, which NH will continue to operate under a lease contract, currently contains 133 rooms, although an extension is planned to add another 112 rooms, which is expected to be completed by June 2019.

The operation will be structured in two phases. On the one hand, Hispania will purchase the asset and sign a long-term lease contract with NH. On the other hand, the Socimi will bear the cost of the investment to improve and expand the hotel. The contract signed with NH provides for the payment of a fixed sum during the first two years, which will be complemented by a variable component, calculated on the basis of income, once the extension has been completed.

Hotel NH Málaga, which has been owned by NH since 1999, has 133 rooms (overlooking the street), nine meeting rooms for events, as well as a restaurant, two terraces and a gym.

Sources at NH have explained that the agreement forms part of its asset rotation strategy and allows it to still benefit from the property’s potential through its operation.

This operation forms part of Hispania’s plan to focus on hotel assets, whilst at the same time divesting from residential assets and rotating its offices. Specifically, in addition to this asset, the company is set to soon close operations amounting to around €200 million and has others worth more than €1,400 million in the pipeline.

Original story: Expansión (by R. Arroyo)

Translation: Carmel Drake

NH Finalises Agreement To Manage 28 Hesperia Hotels

5 December 2016 – Expansión

NH is finalising an agreement with the President of Hesperia, José Antonio Castro, which should be signed within the next few days. According to reports from sources close the negotiations, the purpose of the agreement is to renew the hotel chain’s management of almost thirty establishments, owned and operated by Hesperia, for the next nine years.

NH will renew the management of twenty-eight of Hesperia’s hotels, all of which are located in Spain. The agreement also establishes that NH will no longer manage two hotels in Venezuela.

According to the conditions recorded in the memorandum of understanding, NH will pay €31 million for the right to manage Hesperia’s hotels, which will be split into three payments. NH could receive up to €8 million in annual commissions for the management of these properties.

Castro has also committed to investing almost €30 million on the improvement and repositioning of the hotels, and on replacing the Hesperia brand with the NH brand. Moreover, the agreement includes guarantees in the event that Castro does not fulfil some of the clauses set out in the agreement. In this case, NH would have access to a stake in Hesperia’s hotels worth around €40 million.

The negotiations have been going on for almost four months and have been fraught, given that Hesperia is a key shareholder of NH. Hesperia, which first left the management of its hotels in the hands of its investee company, NH, at the beginning of 2009, is the hotel chain’s third largest shareholder with a 9% stake, behind the Chinese group HNA (29.5%) and Oceanwood (12%). The conditions presented by Castro were approved by NH’s Audit Committee, which is chaired by Koro Usarraga Unsain, and received unanimous support from NH’s Board of Directors, in which nine of the eleven members voted, given that neither Castro nor Francisco Javier Illa, who are representatives of Hesperia, participated in the negotiations.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

The Salazar Family Sells Hotel Velázquez For €63M

26 July 2016 – El Confidencial

Beset by debt, the Salazar family, the former owner of SOS-Cuétara, has spent the last three years trying to get rid of its vast hotel and real estate empire, an emporium whose last great jewel was the Gran Hotel Velázquez in Madrid, a property for which it has just received an irresistible offer.

Corporacion Hispano Hotelera, the company owned by the Salazar-Bello family, has reached an agreement with the Didra Group, famous for having constructed the luxurious residential areas of Montepríncipe and El Encinar, to sell the property for €63 million, according to several sources close to the deal.

The Ardid Villoslada family, which is behind Didra, has been linked to the property development business for decades and was made famous due to the marriage of one of its members, Rafael, to Mariola Martínez Borduí, the granddaughter of the dictator Francisco Franco. One of their sons, Jaime Ardid Martínez Bordiú has closed this agreement, with a view to opening a luxury 5-star hotel.

On 23 August 2016, Corporación Hispano Hotelera will present this sale for approval by the General Shareholders’ Meeting, with the aim of wrapping up the final sale in January, once the Salazar family has also received the blessing from its creditor banks, led by Banco Popular.

With its privileged location, in the heart of the neighbourhood of Salamanca, just a stone’s throw from the Retiro Park and the capital’s golden mile, the Gran Hotel Velázquez is a sought-after establishment. Nevertheless, it needs to be completely refurbished, according to experts in the sector.

In fact, Didra is expected to invest between €15 million and €20 million refurbishing the property. It plans to retain the image of a more bourgeois Madrid that characterises it, and always under the maxim of reserving the right to manage it, meaning that the Ardid family’s plans do not include opening a large hotel chain.

Didra maintains a close relationship with brands such as AC and NH, with which it operates some of the properties in its hotel group Nevertheless, the plans that the Ardid family have in mind for the Gran Hotel Velázquez more closely resemble the concept of the Hotel Palacio de Villapanés in Sevilla, a 5-star property located in the neighbourhood of Santa Cruz, in a former seventeenth century palace, which Didra manages itself.

With this sale, Corporación Hispano Hotelera will be reduced to an empty shell, after selling off the majority of its hotels in just over two years. The house of cards first started to topple in the Spring of 2014, when it had to close down Hotel Ada Palace, located on Gran Vía in Madrid, after it was evicted by the owner of the property, Real Gran Peña, which denounced the company for not paying the rent.

A year later, Hotusa purchased the Hotel María Elena, located 50m from Puerta del Sol, and renamed it the Eurostars Casa de la Lírica; meanwhile, Platinum Estates acquired the Hotel Asturias, in Plaza de Canalejas for €21.5 million. (…).

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake

Oceanwood: Supported By 42%+ Of NH’s Shareholders

16 June 2016 – Expansión

The investment fund Oceanwood is gaining support in NH in its crusade against the Chinese group HNA – the Spanish hotel chain’s majority shareholder with its 29.5% stake – and now has the backing of more than 42% of the shareholders, who will vote in favour of its proposals at the next General Shareholders’ Meeting scheduled to be held on 21 June.

Specifically, Oceanwood, with its 11% stake, will be supported by high profile shareholders such as Hesperia and Henderson, as well as other institutional investors, according to market sources.

At the Spanish chain’s next General Shareholder’ Meeting, a vote will be taken, at Oceanwood’s petition, regarding the departure of HNA’s four directors, including Charles Mobus – Co-Chairman of NH – due to a possible conflict of interest that has arisen as a result of the Chinese group’s recent purchase of Carlson.

The fund has proposed that Paul Johnson, Fernando Lacadena, María Grecna and José María Cantero de Montes-Jovellar take over from the Chinese directors. NH’s share price fell by 3.37% on the stock exchange yesterday, to €4.16 per share.

Original story: Expansión (by R.Arroyo)

Translation: Carmel Drake

Q1 2016: 4 Largest Socimis Almost Their Triple Profits

18 May 2016 – El País

The Socimis have become one of the most attractive investment vehicles in the financial market. With an annual return of around 5%, the four largest Socimis – Merlin Properties, Hispania, Lar and Axiare – earned €73.3 million in total during the first quarter of this year, which represents almost triple the €28.8 million that they achieved during the same period last year. These companies now own property-related assets amounting to more than €5,600 million.

The Socimis are key players in the Spanish real estate market. The four largest companies have starred in high-profile acquisition of buildings, shopping centres and hotel chains in recent months. During the first quarter alone, they have bought properties for €285 million and they are now preparing new acquisitions for the months ahead. These companies are revitalising a depressed sector thanks to, amongst other reasons, the tax advantages that they enjoy.

The returns that these firms are generating are overwhelming. The four largest Socimis – Merlin, Hispania, Lar, Axiare – generated income of €127 million during the first three months of the year and a profit of €73.3 million, according to information published by Spain’s National Securities Market Commission (CNMV). Most of their revenues come from the lease of shopping centres, hotels, offices and other properties that they acquire using funds raised from investors. (…).

Their rise has been meteoric. The largest Socimi, Merlin Properties, has a portfolio of 1,017 assets (buildings, offices, retail premises, leisure centres) worth more than €3,218 million. During the first quarter of the year, it earned €45.24 million, up by 131% compared to the same period in 2015 and it is rubbing shoulders with the country’s largest companies in the Ibex 35 after buying Testa from Sacyr last year for €1,794 million.

Hispania also stands out in the sector thanks to the prestige of its major investors. The magnate George Soros (16.7% of the capital) and the popular investment fund manager John Paulson (9.85%) feature amongst its shareholders. (…). The company is the owner of properties that it leases to hotel chains such as Barceló, Meliá, NH and Vincci, amongst others.

Another one of the largest Socimis is Lar España, which doubled its revenues during the first quarter of the year. This company is undergoing expansion, like all of the firms in the sector, which led it to purchase a retail complex in Barakaldo, the Palmas Altas Norte shopping centre (Sevilla) and to formalise the purchase of the remaining stake in the La Marina shopping centre in Ondara (Alicante) for €70.6 million.

Meanwhile, Axiare recorded a profit of €5.1 million, which represents a 1% increase with respect to the same period last year. Nevertheless, its revenues have grown by 38% due to the operation of new acquisitions signed last year. During the first three months of the year, Axiare spent €33 million acquiring two buildings: one property on Josefa Valcárcel (Madrid) and one shopping centre in Roquetas de Mar (Almería).

Original story: El País (by J. Sérvulo González)

Translation: Carmel Drake

The Pérez Gil Family: Accor & Hilton’s Spanish Partner

1 February 2016 – Expansión

Routemap / Hoteles Temáticos, which works with giant players in the hotel sector through franchise contracts, expects to double in size and revenues over the next four years.

The Pérez Gil family is making closer ties with large international hotel groups. The family, which already has a partnership with the French company Accor, has now signed a similar agreement with Hilton. A new partner, but the same modus operandi: a franchise agreement that allows Hoteles Temáticos, the company owned by the Pérez Gil family, to manage hotels and, in exchange for a fee, use Accor and Hilton’s brands and distribution channels, which have 25 million and 74 million users, respectively, in their loyalty programs.

This summer, Hilton will open the doors of its first hotel in the centre of Madrid – until now the hotel giant had just one hotel in the city, next to the airport (pictured above) – under the Double Tree brand, which will debut in the capital. The 4-star property will have 61 rooms and will be located on Calle San Agustín, opposite Congress. The work to renovate the building, which housed offices until now, will cost around €4 million. In parallel, the Pérez Gil family has paid €8 million for 50% of the property.

In addition to this project with Hilton, which will allow the family to raise its profile in the US market, Hoteles Culturales is finalising several other new additions. It currently operates three hotels under franchise agreements with Accor in Madrid and Barcelona, as well as a complex containing 16 apartments in the capital and another (unbranded) 3-star property in Alfaro (La Rioja). “Our objective is to increase our portfolio from 400 rooms to between 800 and 1,000 rooms by 2020, and for our turnover, which currently stands at €10 million, to grow to €25 million”, says Guillermo Pérez Palacios, Director General of Hoteles Temáticos and the son of Antonio Pérez Gil, who used to be the Chief Operating Officer of NH, when the chain founded by Antonio Catalán had six hotels.

Royalties

In the short term, Hoteles Temáticos will focus on Barcelona and Madrid…but Bilbao, San Sebastián, Porto and Lisbon also feature on its radar. The company is looking for management contracts, and, depending on the opportunity, investment contracts. And the door is also open to new partners, even though the involvement of international brands can increase investment costs by up to 20%, due to the high quality and safety standards such brands demand.

Agreements with overseas brands include the payment of royalties for the use of those brands and their distribution channels. Nevertheless, the formula has its benefits: “The consistency of the brand makes up for (the associated costs) and helps to make investments more effective”. At the Hotel Ibis Styles Madrid Prado, the Pérez Gil family’s first franchise contract, 55% of reservations are generated by Accor’s sales channel. According to the franchisee, brands allow hotels to increase revenues per room by between 10% and 15% compared with those charged by independent hotels and domestic chains. “Brands have allowed us to reduce our dependence on online travel agents”.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake