Mandarin Oriental is on the line to acquire Madrid's Hotel Ritz for $143 million. According to TTG Digital, the acquisiton is part of a joint venture with Saudi Arabian multinational The Olayan Group.
As part of the deal, Mandarin Oriental and Olayan will each hold 50 percent interest in the joint venture, which is purchasing all of the shares in owning the Hotel Ritz from existing shareholders Belmond Spanish Holdings and Landis Inversiones.
The Business Times reported that the 167-room hotel will undergo a full renovation in 2017, with an estimated cost of nearly $100 million. Mandarin Oriental's total investment for its share in the project - including the acquisition, renovation and transaction expenses - is an estimated $122 million, with the group's share of the purchase price to be paid from cash reserves and the renovation to be funded through a mix of equity and debt. Mandarin Oriental will manage the hotel under a long-term management agreement.
"The successful completion of the sale of Hotel Ritz is another positive step in our strategy of disciplined capital recycling,” John Scott, president and CEO of Belmond, told Finances.org. “We are pleased to have achieved such an attractive price for the sale of the hotel and to be passing on the stewardship of this historic landmark to its new owners.”
This is a good time to own a hotel in spain, as a recent report from Spanish News Today found over 23 million room nights were spent in hotels during the month of April, an increase of 3.6 percent year-over-year. Spaniards accounted for under half the total, despite a year-over-year increase of 5.7 percent to 9.5 million nights, while 13.5 million nights spent by visitors from abroad represented a 2.1 percent increase.