That didn't take long. The Taj Boston, owned by India-based Taj Group, went on the market less than two weeks ago. Over the long weekend, a local group of real estate firms reached a deal with Taj to acquire the hotel.
New England Development and Eastern Real Estate, along with their partners, Rockpoint Group of Boston and Philadelphia-based Lubert-Adler, reached an agreement with the Taj Group to buy the hotel for an undisclosed price. When the hotel was first put up for sale, the Indian Hotels Company, which owns the Taj Group of hotels, put the minimum bid at $125 million.
The deal is scheduled to close in July, and the hotel will keep the Taj name.
Indian Hotels acquired the former Ritz-Carlton, Boston, in 2006, for $170 million, before rebranding the 273-room hotel the Taj Boston. Profitability at the hotel reportedly declined during the recession. Revenues and EBIDTA margins dropped, with net loss before tax at $7.3 million last year on $34.1 million in revenue. Excluding interest, depreciation, and taxes, the loss was $600,000.
The Mumbai, India-based Taj Group, one of Asia's largest hotel groups, is part of multinational conglomerate Tata Group. It controls more than 100 hotels worldwide.
New England Development and Eastern Real Estate have worked together on numerous projects, including the development of University Station in Westwood, one of the largest mixed-use developments in the state. New England Development owns hotels in Nantucket and Newburyport, but this would be one of its first large-scale urban properties.
A Boston Bargain
Compared to other recent luxury Boston hotel deals, $125 million for the Taj Boston would be "something of a bargain," one source noted. At $457,875 per key for the 273-room hotel, the Taj would be well-behind the $950,000-per-room Mandarin Oriental Hotel Group paid to pull the Back Bay’s Mandarin Oriental out of bankruptcy earlier this year.
“That’s an extraordinarily attractive price to a lot of people,” Tim Kirwan, former GM at the InterContinental Boston and current principal of the Hotel Creation consulting firm, said of the Taj sale. “Though the reality is that nearly half a million a key is just the beginning, when you think about renovations it needs.”
Some industry insiders reportedly suggested that keeping the Taj name—combined with those serious financial losses—could negatively affect the sale price. Still, maintaining the hotel name was one of Indian Hotels’ stated priorities in the sale, and may have been worth receiving less money.