Yesterday, we noted that total hotel sales worldwide had reached $42 billion for the first half of 2015 alone. While we have yet to see the final numbers for the second half, it's safe to say that this was a boom year for hospitalitity investors.
In November and December alone, two game-changing deals made headlines worldwide, and made it seem likely that hotel brand consolidation would follow the path laid by the ever-shrinking airline industry.
But before we talk about the mergers of Starwood and Marriott and of Accor and FRHI, let’s look at some other big portfolio buys that made 2015 one for the record books.
January 14: Expanding beyond London
At the beginning of the year, Topland, a UK-based private investment company, acquired England's Feathers Group for an undisclosed sum, adding 726 rooms across Best Western-branded properties in Manchester, Liverpool, Chester, Preston and Warrington. The Feathers’ portfolio comprises the Queen hotel, Chester; Llyndir Hall hotel, near Chester; Westminster hotel, Chester; Leyland hotel, Preston; Fir Grove hotel, Warrington; Willow Bank hotel, Manchester; and the Feathers and Alicia hotels, Liverpool. Topland has a total portfolio of 38 hotels with 4,100 rooms. It owns and manages 29 hotels and leases nine. The trend of investors seeking out UK deals beyond London continued throughout the year, with good value to be found in many cities throughout the Kingdom.
March 3: Loving Groupe du Louvre
Starwood Capital Group sold Groupe du Louvre and its indirect subsidiary Louvre Hotels Group to Shanghai Jin Jiang International Hotels for €1.3 billion. Shanghai Jin Jiang International Hotels Development, of which Jin Jiang International Holdings is the single largest shareholder, owns and operates 1,215 economy and mid-scale hotels with more than 140,000 rooms in Asia. Louvre Hotels Group is the second-largest hotel group in Europe, with a network of more than 1,100 hotels (more than 90,000 rooms) in more than 40 countries worldwide.
March 20: Sun shines on Peermont
South African hotel chain Sun International announced plans to take over casino resort group Peermont for nearly $775 million. Peermont operates a portfolio of gaming and hospitality businesses in SA and Botswana and owns nine casino resorts, including its flagship Emperors Palace casino resort in Johannesburg. (The deal, however, recently “hit a regulatory hurdle” that has so far prevented it from moving forward.)
August 12: Jin Jiang's Vienna investment
Jin Jiang Hotels Group invested approximately $289.8 million for an 80-percent stake in the midrange Vienna Hotel Group and its restaurants.The acquisition of Vienna Hotels Group, which is based in Shenzhen, China, would add an additional 479 hotels with 60,000 rooms to Jin Jiang Hotels’s portfolio. Vienna's Wudaoxiang restaurant chain (which has more than 40 restaurants under four brands) was also included in the acquisition deal.
August 13: Hungry for Hungary
U.K.-based CP Holdings obtained a 98.2-percent stake in Danubius Hotels Nyrt, the largest hotel chain in Hungary. The company both owns and operates 23 hotels (with over 5,500 rooms) and is also the majority owner and operator of eight hotels in Marienbad, Czech Republic; 12 hotels in Slovakia; and three hotels in Sovata, Romania. The offer price was HUF 8,000 per share. At the time, CP Holdings said it would exercise its “squeeze-out right” as soon as possible and delist Danubius Hotels from the Budapest Stock Exchange.
August 30: Spending green on Red Roof Inn
Singapore-based tycoon Tan Boy Tee purchased a majority stake in the 89-hotel Red Roof Inn portfolio. Tan made the acquisition through his privately held company Bestford Capital and teamed up with Westmont Hospitality to put together a winning bid of $600 million for the U.S.-based chain. Westmont will hold on to a minority stake and continue to operate the hotel brand, which includes 10,715 rooms.
October 16: AccorHotels grows in France
AccorHotels purchased a 43-property portfolio from Foncière des Régions for a total of €281 million. The French hotels, which have a total of 4,237 rooms, have been operated under variable leases by AccorHotels since 2005 and 2007, under the ibis budget, ibis, Novotel, Mercure, Pullman and Sofitel brands. The deal is scheduled to be finalized in the first half of 2016.
October 29: Europe is prime
A joint venture between UK-based private equity real estate fund manager Benson Elliot and U.S.-based Walton Street Capital (in partnership with Algonquin SA) acquired Prime Europe Hotels, a pan-European portfolio of eight hotels in seven major cities across five countries for approximately €420 million. The portfolio was purchased out of Host Hotels & Resorts Inc.'s European joint venture. The eight freehold properties cover 2,308 rooms in Venice, Paris, Milan, Rome, Warsaw, Nuremberg and Brussels.
November 16: Marriott buys Starwood
This was the big one: After months of speculation of who would acquire Starwood Hotels & Resorts Worldwide, Marriott International nabbed the company for a total of $12.2 billion consisting of $11.9 billion of Marriott stock. The deal, expected to close in mid-2016, made the combined businesses the largest hotel company in the world, with 30 brands, 5,500 hotels and more than 1 million rooms.
At the time, Michael Bellisario, VP at Robert W. Baird & Co., told HM that the deal was “transformative” for both Marriott and the whole lodging industry. "It better positions Marriott to compete against the other major global brands as well as the new alternative lodging companies, such as Airbnb, that are impacting the competitive landscape of the hotel industry today," he said.
After the deal was announced, Rick Hoffman, Marriott International's EVP of mergers, acquisitions and business development, said that the hotel industry was "behind" on consolidation. "We are a remarkably fragmented, highly competitive industry," he told HM. "There are dozens of big companies and lots of smaller companies. I think it's natural that there will be some consolidation."
December 8: BTG looks to buy China’s Homeinns
Chinese economy hotel brand Homeinns Hotel Group (which operates China’s largest budget hotel chain) announced plans to merge with the Hong Kong and Cayman Island subsidiaries of BTG Hotels Group Hong Kong. BTG is expected to purchase Homeinns in a deal valued at $1.7 billion. The merger is likely to be finalized in the first half of next year, pending regulatory and other considerations. Upon approval of the deal, Homeinns, which owns five brands and operates more than 2,700 hotels, will be a wholly owned subsidiary of Shanghai-listed BTG Hotels and will be de-listed from NASDAQ.
December 9: AccorHotels buys three brands
Unlike the long-in-speculation Starwood deal, AccorHotels’s acquisition of FRHI Holdings, parent company of the Fairmont, Raffles and Swissôtel brands, came as more of a surprise. The deal was made with the Qatar Investment Authority, Kingdom Holding Company of Saudi Arabia and Oxford Properties (an Ontario Municipal Employees Retirement System company).
When the deal was announced, AccorHotels said that it would pay for the acquisition by issuing 46.7 million new Accor shares and a cash payment of $840 million, while The Qatar Investment Authority and Kingdom Holding Company of Saudi Arabia will become major shareholders, with 10.5 percent and 5.8 percent of the share capital, respectively. Two representatives of QIA and one representative of KHC will be appointed to the Accor Board of Directors.