Tag: NH

Barceló, NH & Meliá Have Sold Assets Worth €1,000M In 2 Yrs

7 January 2016 – Expansión

The large Spanish hotel chains, led by Barceló, NH and Meliá, are continuing to slim down their real estate portfolios and to opt for lease and management contracts – over the last two years, they have sold assets worth more than €1,000 million with a dual objective: to clean up their balance sheets and to finance the growth and modernisation of their properties.

Barceló leads the ranking, by volume, thanks to the creation of the Socimi Bay together with Hispania. The hotel chain transferred 16 hotels and two shopping centres to the new entity in 2015. Hispania holds a 76% stake in Bay, having invested €458 million in the company. In parallel, between 2014 and 2015, Barceló sold other assets in the USA, Latin America and Spain – including the Hotel Barceló Santiago to the Chinese company Chongqing Kandge – for €212 million.

The intention of the group controlled by the Barceló family was to reduce its real estate exposure, which had reached a historical peak. The effect of these divestments has been partly offset by the purchase of its competitor Occidental, also in 2015. Currently, Barceló owns 45% of the 118 hotels that it operates.

Meanwhile, NH signed the largest divestment operation seen in the last two years. In 2014, it transferred the Spanish business of Sotogrande to Cerberus and Orion for €225 million. The hotel chain still has projects in Italy, Mexico and the Dominican Republic, but they may be removed from its portfolio in the medium term, given that it has now placed its focus on hotel management.

Strategy

Both NH and Meliá, whose strategy at the beginning of the crisis involved signing the highest number of low value transactions, is now seeking out juicier, more selective deals. Thus, last year, Meliá joined forces with the fund Starwood Capital to create a company to which it transferred seven hotels worth €176 million. The chain owned by the Escarrer family, which holds a 20% stake in the new company, will manage the hotels for 15 years. Moreover, it also sold the Calas Mallorca complex, which has 875 rooms, for €23.6 million.

Unlike NH and Meliá, which have chosen to replicate the Anglo-saxon model and reduce their real estate risk, other chains such as Iberostar and RIU are continuing their commitment to own their properties and so their divestments are happening in dribs and drabs. In 2014, RIU sold the Hotel Waikiki in Gran Canaria for €24 million and it sold Hotel Olivina in Lanzarote to Mazabi, which Iberostar now manages under its Olé brand. Last year, Mazabi also acquired two Iberostar hotels (the Santa Eulalia and the Costa del Sol) for €60 million.

Meanwhile, Iberstar’s last known divestment was made in 2013, when it transferred a hotel in Mallorca through a finance leasing operation. When that contract terminates, it will recover the ownership of the property, which it is continuing to manage.

In 2016, the experts expect that NH and Meliá will continue to carry the baton, but that there will not be any major operations, since their deleveraging has now been reduced. NH’s debt decreased by 16% between 2010 and September 2015. Meanwhile, Meliá’s debt, which exceeded €1,000 million in 2011, had fallen to €840 million by September (2015).

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake

NH Appoints 2 New Directors Despite Protests From HNA

22 June 2015 – Cinco Días

On Friday, the fund Oceanwood, which controls 7.58% of NH’s share capital, managed to take a seat on the hotel chain’s Board of Directors, despite HNA’s efforts to the contrary. HNA had tried to avoid the appointment of any new directors, by requesting the inclusion of an additional item on the agenda of the shareholders’ meeting, to limit the number of Board members to 11, even through the company’s bylaws provide for a maximum of 20.

The Chinese group HNA, which holds a 29.5% stake in the hotel chain, justified its proposal as being “in the interests of greater legal certainty”, even though the investment funds (other NH shareholders) had requested a seat on the board. HNA’s position meant that the funds’ entry depended on one of the existing seats being vacated.

Although the item (the vote regarding a reduction in the size of the Board) is still on the agenda of NH’s shareholders’ meeting, which will be held on 29 June, the management body decided to appoint two new directors on Friday, in support of their goal to strengthen “their commitment to transparency and good governance”. And so, Alfredo Fernández Agras was appointed as a proprietary director, at Oceanwood’s request, and Koro Usarranga Unsain was appointed as an independent director. These appointments must now be ratified by the shareholders.

Thus, NH has 13 members on its Board of Directors once more; the number had decreased to 11, after Intesa San Paolo’s exit from the hotel chain’s share capital. The company said yesterday that “the new governance structure strengthens the composition of the Board of Directors over the long term and achieves representation of all stakeholders in line with best corporate governance practices”. According to the company, the decision was taken by “unanimous vote of all of its Board members”.

The fund Oceanwood acquired capital in the hotel group after Santander placed 8.5% of its capital in the market. Santander had, in turn, received the stake from Grupo Inversor Hesperia as payment for some of its debt. BlackRock and Henderson then also became shareholders. These funds requested that NH’s Board strengthen the role of its independent directors to prevent the Chinese group HNA from strengthening its stake and position on the management body, without launching a takeover – it is not obliged to do so until its shareholding exceeds 30% – . HNA has four seats on NH’s board, compared with Hesperia, which has two.

Original story: Cinco Días (by L.S.)

Translation: Carmel Drake

Santander sells 8.5% NH Stake to BlackRock and two other funds

21 May 2015 – Expansión

153 MILLION / The bank has divested after five months at 5.1 euros per share, in line with the listed price.

Banco Santander has ended a two-and-a-half-year affair with the NH Hotel Group. Yesterday, the financial institution, headed by Ana Botin, placed for sale its 8.56% stake of the hotel chain at 5.10 euros per share. The ask price was hardly a discount off the listed price of NH, which closed flat at 5.17 euros thanks to high demand. The transaction amounted to 153 million euros.

Santander’s stake has been split almost entirely among three foreign funds that already held stakes in NH: BlackRock, Henderson and Oceanwood. Following the transaction, BlackRock and Oceanwood now hold about 7.5% of NH each, while Henderson’s stake is slightly smaller, according to industry sources. After having strengthened their position, the funds will ask to enter the Board of NH.

Discontent

This transaction is taking place after funds and minority shareholders expressed their discontent following the NH board’s decision not to fill in the two vacancies on the board with representatives of independent investors after the exit of Intesa Sanpaolo. This situation indirectly reinforces the power of the Chinese conglomerate HNA, leading shareholder with 29.5%, and the four board members. The second leading shareholder, after NHA, is Grupo Inversor Hesperia, with a stake of 9.09% and two representatives on the management body.

Hesperia was instrumental in bringing Santander to NH. The company, led by developer José Antonio Castro, resorted to loans in a frustrated attempt to gain control over NH. Santander, its main creditor, decided to take action against Hesperia defaults and get a stake in NH. In late 2012, it placed Rodrigo Echenique in the presidency and, last December, refinanced the Hesperia debt in exchange for a 8.56% stake in NH.

The divestiture of Santander, which was only a matter of time, brings this phase to an end. It will also lead to a change in the NH presidency in the coming months.

Meanwhile, the company is continuing to improve its figures. Between January and March, the NH revenue, excluding Royal Hotels, rose by 2.3% up to 272.3 million euros, driven by the upturn in Spain and Italy. The net result was negative (29.1 million), but 24.7% better than back in 2014.

Original story: Expansión (by Y.Blanco)

Translation: James Leahu

Tourist Sector Hits Back At Airbnb, HomeAway & Niumba

18 May 2015 – Expansión

The sector is demanding a stronger institutional fight against the intermediaries. The Government says that each region is responsible for its own response.

The main Spanish tourism companies have teamed up in an offensive with the aim of limiting the power of the proliferation of unregulated tourist rental accommodation, which do not pay taxes and do not meet the safety, hygiene and space requirements and other guarantees offered by legal accommodation. The sector wants to curb the platforms (websites such as Airbnb, 9flats, Wimdu, Rentalia, Niumba and HomeAway, amongst others) that make money by acting as intermediaries. And to that end, it has been pressuring the Spanish Government for some time to prohibit them, since they think that the autonomous communities are not fulfilling their regulatory duties.

Over the last few months, the tourism association Exceltur, whose members include prestigious companies such as NH, Melia, Iberia, American Express, Hotusa and Globalia, has been holding conversations with the Secretary of State for Tourism (who reports into the Ministry for Industry, Energy and Tourism). Exceltur thinks that the Executive “could do a lot more” to regulate the operations of these rental companies, which it considers are unfair competition and which threaten its business. The main trade association for Spanish hoteliers, Cehat, estimates that between 2010 and 2013, the number of customers staying at these establishments increased by 300%, and it calculates that the number of foreign tourists who use them represents more than 20% of the total.

To support its position, Exceltur has commission the consultancy firm EY (Ernst & Young) to conduct a study analysing the impact that this illegal rental accommodation is having on the tourism sector as a whole, not just on the hotel segment. To date, EY has prepared a report about the consequences for the Balearic Islands if this rental accommodation continues to grow at its current rate over the next ten years. According to its calculations, the hotel sector would lose between 5,000 and 13,000 jobs and forgo a gross added value of between €211 million and €529 million.

Regional jurisdiction

The Government says that tourism is a regional jurisdiction, and so the Central Administration cannot do much beyond trying to standardise the regional regulations as much as possible. Moreover, the upcoming regional and general elections are likely to scupper any attempt at reform.

To date, the regions that have endeavoured to do the most to regulate tourist rental accommodation are Madrid and Cataluña, although the former received a blow from the National Competition and Markets Commission (CNMC) in March when it ruled that the Madrid law (which only allows accommodation to be rented provided the minimum stay is five days) is a barrier to free competition.

Meanwhile, the Catalan Generalitat requires intermediary websites to ensure that each property offered for rent has a kind of identification number plate to accredit it as accommodation with its license in order. Last summer, Cataluña imposed a fine of €300,000 on the web portal Airbnb for allegedly failing to comply with that standard.

On an international level, cities are taking a variety of decisions. Thus, for example, New York has declared war on tourist rental accommodation, with coordinated teams of tax inspectors, police and lawyers; and the town hall of Amsterdam has just approved an agreement with Airbnb, which requries the platform to coordinate the collection of the tourist tax that is applicable to the activities of its users.

The so-called “collaborative economy” represents a real headache for legislators, both in Spain and across Europe. In Spain, Article 16 of the Law for Information Society Services (2002) states that intermediaries (such as Airbnb, Uber and others) are not liable for the possible unlawfulness of the people they host, unless they have specific knowledge thereof. Meanwhile, the European Commission is drafting a directive that may ease restrictions on the European market and facilitate the activity of these platforms.

Original story: Expansión (by Yago González)

Translation: Carmel Drake

Large Chinese Investors Pounce On Spanish Hotel Sector

27 April 2015 – Expansión

The Asian giant is taking centre stage / Since HNA acquired shares in NH, interest from Chinese investors looking to buy hotels in Spain and forge alliances with chains such as Melia and Barceló has skyrocketed.

The Spanish tourism sector has sparked significant interest amongst Chinese investors. Since HNA knocked on NH’s door for the first time in 2011, interest in investing in Spain has been unleashed. In recent years, hotel purchases by Chinese investors and alliances between Asian groups and major Spanish (hotel) chains, such as NH, Melia and Barceló, have exploded, as all parties look to explore opportunities in Europe and Asia.

In the past two years, China has invested more than €870 million in Spanish hotels and chains. Of that amount, €420 million relates to the funds disbursed by HNA to become the major shareholder of NH. The industrial conglomerate paid €234 million for a 20% stake in 2013 and last year, it purchased the shares owned by Amancio Ortega, owner of the textile empire Inditex, and Intesa Sanpaolo.

Furthermore, in 2014, Chinese investors signed five transactions to purchase hotel assets, including the deal between Barceló and Kangde for the Hotel Santiago in Tenerife (pictured above), which was agreed at the end of last year and signed in 2015.

Platinum

Out of all of these deals, the one that attracted the most media interest was Dalian Wanda’s purchase of Edificio España (Madrid) for €265 million. The intention of Wang Jianlin, who owns Wanda, is to create a residential, retail and luxury hotel complex. However, for the time being, Jianlin is focusing on the five-star hotel that he is preparing (to open) in London, where he will launch his Wanda brand in Europe.

Platinum Estates, the group led by the textile businessman Harry Mohinani and headquartered in Hong Kong, has closed two deals on a smaller scale. In February 2014, Platinum acquired the Estel building, in Barcelona (Telefónica’s former headquarters) for €56 million. In the autumn, it purchased Hotel Asturias (Madrid), near Gran Vía, from the Salazar family for €35 million.

The company plans to convert both properties into luxury apartments. According to experts in the sector, that is one of the keys to explaining the Asian interest in Spain, where foreign citizens are required to invest €500,000 in a residential asset to obtain a (resident’s) visa (known as the golden visa). Other factors include the measures promoted by the Chinese government to encourage investment overseas and the revaluation of the Yuan against the euro. Sources in the sector confirm that interest from Asian investors has increased, but they say that they do not seem to follow any particular investment pattern, and that, to date, they have focused on individual assets. Despite all of this, the large consultancy firms in the sector are optimistic about the potential of the Asian market – they have already recruited Chinese employees and are now preparing tours around the country to bring the two markets closer.

That is another one of the advantages that the alliances with Chinese groups offer the Spanish hotel chains. For example, NH will enter the (Chinese) market hand in hand with HNA. Both have created a joint company, with a Chinese majority, which will begin operating in 2015, when NH takes over the management of 6 of HNA’s hotels. In the case of Melia, the chain operates two hotels owned by its partner Greenland in China, and in 2014, it teamed up with the travel group Ctrip.

Original story: Expansión (by Yovanna Blanco)

Translation: Carmel Drake