B&B Adds 7 Hotels to its Portfolio in Spain

5 February 2018 – Expansión

Growth / The French group has added seven establishments from the H2 Hoteles chain, two under ownership. Its domestic portfolio now comprises 29 hotels and more than 2,700 rooms. 

B&B Hotels –owned by the private equity fund PAI Partners – is strengthening its commitment to Spain. The French group, which arrived in the country in 2015 with the purchase of four hotels and, one year later, purchased the low-cost chain Sidorme, has incorporated seven new establishments from the Catalan H2 Hoteles chain into its portfolio. Two of the properties have been included as owned assets and the other five are rental arrangements; these hotels contain 600 rooms in total.

With this operation, the company specialising in low-cost hotels now operates 29 establishments in the domestic market, comprising more than 2,700 rooms.

Specifically, B&B Hotels has completed the purchase of the management company and the rental contracts – which have a duration of almost 20 years – and has incorporated the H2 Hoteles establishments’ teams in Castellón, Elche, Getafe, Granada and Jerez de la Frontera, owned by AC Hoteles. Moreover, the French group has taken ownership of another two hotels in Oviedo and Rubí (Barcelona).

Following the purchase, H2 Hoteles will have three hotels left in its portfolio –H2 Sant Cugat (Barcelona), H2 Fuenlabrada (Madrid) and H2 Ávila–, as well as apartments in Cáceres.

The Director General of B&B Hotels Spain and Portugal, Jairo González, explained to Expansión that the company plans to sell the ownership assets in the short term. “We will likely incorporate other hotels to be able to have a portfolio of assets that we can sell all together, continuing with their management and following the company’s asset-light model”, he said.

In the framework of this strategy, in May, B&B Hotels reached an agreement with the investment fund Corum to sell eight hotels that it owned in Spain for €30 million. By virtue of that agreement, B&B will continue to operate those establishments under rental agreements for at least 15 years.

The director said that the H2 Hoteles establishments are “in perfect operating condition”, and will be adapted over the next few months to fit with the company’s corporate image.

“The forecast investment for the seven hotels amounts to almost €1.5 million and will be limited to adapting the establishments to our identity”, he added.

Plans

In terms of growth plans, the executive expressed his intention to continue to increase his firm’s presence in Spain. “We have more than 20 projects under development in different degrees of maturity in the Iberian Peninsula. In Portugal, for example, we expect to announce more news soon. We forecast that we will have more than 50 establishments by the end of 2019”, said González.

B&B’s roadmap in Spain allowed the firm to triple its revenues last year to reach €30 million. Besides Spain, B&B Hotels Group has a presence in France, Germany, Italy, Poland, Morocco, the Czech Republic and Brazil. The company’s plans involve strengthening its world network to reach 600 hotels by 2020, with around 50,000 rooms.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Hotel Investors Switch Their Focus To Spain’s Second Cities

20 July 2017 – Expansión

Hotels have become of the star assets of the real estate sector with Socimis and investment funds lining up to buy them. And the forecasts show that these actors are set to consolidate their presence in Spain, gaining ground on the hotel groups – which will continue their commitment to a strategy focused increasingly more on management and less on ownership – and will analyse new secondary locations, in light of price rises and the decreasing yields in prime cities.

According to the Hotel Asset Management 2017 report, prepared by Magma HC, three-star hotels captured the attention of investors last year, given that they represent the most attractive asset for implementing repositioning models and improving prices. Specifically, 38% of the transactions closed in 2016 involved three-star hotels, 28% related to four-star properties, 24% to low-cost establishments and the remaining 9% to five-star hotels.

Albert Grau, Managing Partner at Magma HC, explained yesterday that the transaction market will shift its focus to the holiday segment, over the next few months, due to the (high) value of assets in prime urban destinations, such as Barcelona, Madrid, Málaga, San Sebastián and Palma de Mallorca, which are at levels that compromise their future profitability.

Although in previous years, the urban hotel market was the most sought-after by investors, in 2016, it accounted for just 33% of operations, whereas the holiday segment increased to account for 66% of the total. “Prices in cities such as Madrid and Barcelona have peaked, and purchases to generate wealth or profitability are complicated given the numbers”, said Grau.

By contrast, he considers that Spain’s secondary cities offer “great opportunities” for investors thanks to the significant potential that they hold and the fact that there are well-located assets there at “very attractive” prices.

However, the partner at Magma HC considers that the sector is a long way from a bubble, thanks to the greater professionalisation and the new requirements in terms of indebtedness levels.

Moreover, the report highlights that the Spanish hotel sector can expect to see new operations between hotel groups, such as between Starwood and Marriott, Fairmont and Grupo Accord and the purchase of Sidorme by B&B Hotels.

Commitment to rent

In terms of the business model, the most popular formula is still rental. Grau underlines that, given the strong performance of the market, owners who took the decision to bet on variable rentals are now receiving greater returns. In addition, the partner at Magma HC believes that the period of rent renegotiations, seen in previous years, is now over.

According to Magma HC’s report, hotel groups own 37% of their assets, lease 33% of them, manage 18% and operate 13% as franchises.

Grau explains that “more Anglo-Saxon” operations – management and franchising – are not growing, but continue to have a specific weight in the market and there is a growing trend to adopt them increasingly more, in line with international standards.

Original story: Expansión (by Rebeca Arroyo)

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

B&B Hotels Takes Control Of Hotel Group Sidorme

20 October 2016 – Expansión

The French hotel chain B&B Hotels, controlled by the French private equity firm PAI Partners, has acquired the Spanish group Sidorme, which has 1,367 rooms across 15 establishments in Spain.

With this operation, B&B Hotels now controls 19 establishments in Spain. The French group already owned four hotels in Valencia, Alicante, Madrid and Gerona, and plans to open a fifth, in Vigo, at the end of 2016.

The Sidorme brand will disappear and will be absorbed by B&B, which is more widely recognised and has a strong international presence. B&B Hotels manages and operates almost 370 hotels in France, Germany, Italy, Spain, Poland, Czech Republic and Morocco.

The head of Sidorme until now, Jairo González, who has purchased a minority “but significant” stake in the hotel chain, will be the CEO of B&B in Spain and Portugal.

The Director has explained that the company plans to enter the Portuguese market soon and grow at double digits over the next three years.

The hotel group expects to increase its sales by 49% in 2016, to exceed €15 million. The company, which increased its sales by 45% in 2015, to more than €10 million, tripled its profits during the same period, to generate a net profit of more than €1 million. “The aim is to achieve cumulative EBITDA growth of 30% over the next three years and to double the size of the hotel chain”, said González.

Sidorme was founded in 2014 by fourteen family offices from across Spain, including the New Windows Group, the Del Castillo family, José Manuel Loureda and the Sansalvadó family, who invested around €25 million in total.

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

Sidorme To Trial Tourist Flats on c/Fuencarral In Madrid

4 April 2016 – Cinco Días

The arrival of summer will see a 180-degree turnaround in Sidorme’s strategy. The hotel chain, which currently manages 12 properties located in Madrid, Albacete, Granada, Valencia, Girona and Barcelona, will move into the tourist flat sector in June. In recent years, this segment has seen tremendous growth in Spain thanks to online platforms such as Airbnb and Homeaway and numerous hoteliers have declared war (on players in the sector) accusing them of unfair competition.

In the case of Sidorme, the property in question is located at number 46 on Calle Fuencarral in Madrid, just a few meters away from a hotel owned by the company. The building is owned by the company Bawar Real Estate, which is responsible for renovating it, and will contain 20 apartments.

“Our idea is that the apartments will be located within a 3-5 minute radius of the hotels that we have in the centre of Madrid, so that we can provide a personalised service from the hotel reception”, says the CEO of Sidorme, Jairo González (pictured above). In addition, the company is finalising a second building containing apartments, which will be located close to the hotel that the chain plans to open after the summer, on Calle Montera, very close to the Puerta del Sol. With this second project, in which Sidorme will invest €2 million, the chain will operate 40 tourist apartments in the centre of Madrid.

Through this initiative, Sidorme hopes to differentiate itself from BeMate, the online platform operated by Room Mate, which also markets tourist flats close to its hotels. After these two buildings, which will form the company’s testing ground, González says that Sidorme will add between 40 and 50 apartments per year, which will ideally be located in buildings dedicated exclusively to this activity. Sidorme is cautious about other cities, “if we do not already have a hotel there, then it will not work”.

Alongside this activity, Sidorme will continue with its growth plans for the hotel segment. It will open its first establishment in San Sebastián in June and its second property in the centre of Madrid in September. The company has halted its plans to dives hotels that it owns, after it failed to receive any financial offers that were in line with its expectations, set at around €30 million. It does not rule out a capital increase or the incorporation of new partners to accelerate its growth plans and it is open to growth through hotels in Madrid “if that is appropriate”, as well as in other secondary cities.

Original story: Cinco Días (by L.S.)

Translation: Carmel Drake

Sidorme Puts 7 Hotels Up For Sale For €25M

28 December 2015 – El Economista

The hotel chain Sidorme is negotiating the sale of a portfolio of seven assets with an asking price of around €25 million. According to Jairo González, the CEO of Sidorme, the objective is to sell the hotels in a single transaction; and interested parties include large investment funds and Socimis. For the time being, “we have not reached any agreements in terms of price, but we are negotiating the returns”, says González.

Through this operation, the group, which is currently in the middle of a growth phase, may deleverage its balance sheet in order to target new investments, but it acknowledges that it is not in any rush, given that it is currently obtaining yields “that it feels very comfortable with”.

Besides these seven hotels that it owns, the chain also has another three hotels that it leases, which together contain 1,230 rooms. It is also constructing another three hotels.

The company’s hotel location strategy is proving key to its success, with the tenth hotel recently opened to the public on Calle Fuencarral 52 (Madrid) and the eleventh hotel currently under construction on the central street of Calle Montera 10-12 (also Madrid).

A twelfth hotel is also under construction and is located between the airport of Donostia San Sebastián and the Guipúzcoan capital; and a thirteenth hotel will open in January in San Sebastián de los Reyes (Madrid), close to La Moreleja and Terminal 4 at Madrid’s Barajas Airport.

The company is going to spend €10 million on the opening of its new hotels, in addition to the €45 million that it has already spent to create its existing portfolio since it began operations back in 2006, with the opening of its first hotel in Mollet del Vallès. With these investments, the chain expects to record turnover of more than €10 million in 2015, with an EBITDA of more than €2.7 million and a net profit after tax of more than €1.3 million, according to González.

The success of this chain is due to its commitment to intelligent accommodation. Its “smartsleep” concept seeks to maximise the simplification of the product offered, eliminating anything that is superfluous for guests and optimising all of the services to reduce operating costs as much as possible, without affecting the quality of its customers.

Thus, its hotels offer modern rooms with simple designs, large beds, showers with a sauna effect and free wifi. They are have offices with fruit and coffee available for clients, but they do not have internal cafeterias or restaurants, although they have reached agreements with nearby restaurants to offer room service at some of their hotels. These savings comes in addition to the fact that the hotels are constructed to require very little maintenance and to consume minimal energy.

Original story: El Economista (by Alba Brualla)

Translation: Carmel Drake

Sidorme Underpins Intention of Growth With Two Hotels in Madrid

8/01/2015 – Expansion

Hotel chain Sidorme has just opened a 3-star, 44-key hotel in Fuencarral Street, Madrid, at 500 meters away from the known high street Gran Via. Sidorme has invested €2.2 million in this rented building. At the end of December, another contract was nailed down on a property at Puerta del Sol Square. Set to open its doors in 2016, the 70-room hotel is undergoing a retrofitting worth €4 million.

After the two openings, Sidorme will own three hotels in the Community of Madrid region as last July the chain inaugurated an establishment in Las Rozas (pictured). Sidorme is controlled by 14 family offices from all around the country. All the hotels have three stars, a model comparable to Ibis.

The company has changed its strategy, now looking to central locations and rather to lease than to buy.

‘This is the perfect time to get resonable rents in the city centers’, assures its CEO Jairo González. ‘Moving from one place to another allows us to double the prices, depending on the demand’, he says. Sidorme advocates for growth in Barcelona and Madrid, while analyzing investment opportunities in Valencia, San Sebastian, Bilbao, Oviedo and Salamanca.

The label ‘low-cost’ will be preserved. ‘We aim at offering decent rooms with comfortable beds, Internet and showers’, Mr Gonzalez explains.

Currently, Sidorme operates in 10 hotels, of which 5 are situated in Catalonia. In 2014, the firm earned €6.9 millin and gained €400.000. In 2015, the chain expects to earn €8.5 million and gain €0.7 million.

 

Original story: Expansión (by Artur Zanón)

Translation: AURA REE