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.
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