Grand; Bournemouth’s Royal Bath; and the University Arms in Cambridge - with two others, the Barony Castle at Peebles and an unwanted Village at Daresbury in Warrington, earmarked for disposal too. Village, which is an unusual
mix of health and fitness clubs, restaurant and hotels, is currently 26-strong. But a further 18 are in the pipeline.
HA Perspective: The sale of the six freeholds by Principal Hayley at first sight looks like a win for the business owners, selling the freeholds at the top of the market and then buying them back with the benefit of a GBP75m haircut. But the original backer of Principal’s big growth spurt in the boom, private equity house Permira, is understood to have written-off its GBP200m investment. In fact, it is yet another example
of the hubris of the boom years. Hayley Conference Centres was bought for GBP358m in May 2007, just months before the credit crunch took hold ending such sprees. The then owner, Alan English, pocketed about GBP62m from the deal. The buyer of the six freeholds
was aAim Lagonda, a fund that had been set up by the aAim, the celebrity-backed property investment business that was put into administration at the end of 2008. Six months prior to going
bust, aAim had been seeking to sell the six freeholds for an, even then, astonishing GBP350m. Not surprisingly, given that debt had by then already left the market, there were no takers. And it is debt that is the link throughout with the Bank of Scotland, now subsumed within Lloyds, playing the critical role
funding Principal, aAim and De Vere owner the Alternative Hotel Group. During 2009 both Principal and
De Vere endured a torrid period of trading with both making losses. While the initial plan for both groups had been to hold rates, desperation quickly set in and a price war developed which has effectively wiped out the original equity in the businesses and left even the senior debt looking stressed. Sales have picked up, but
there remains significant market pressure, particularly given the current weakening economy. Lloyds has clearly decided it is
in for the long haul, bailing out the aAim investment to keep the six hotels within the control of Principal. The opportunity is now surely to combine Principal with De Vere to create a conference hotel group that has reasonable pricing power. The industrial logic of Principal
De Vere with a span-off Village looks compelling. Whether it is enough to overcome the other obstacles to putting the companies together remains to be seen.
Park Plaza renames as Carlson franchisees
tidy up Park Plaza Hotels is picking a new name as it joins fellow Carlson master franchisee Rezidor in adopting a new approach for the New Year.
Park Plaza made the
announcement as part of a trading update which showed turnover up 49% in 2011. A strong performance in London, new hotels and increased ownership accounted for the growth, with like for like revenue up 15%. Boris Ivesha, President and
CEO, commented: “Our 2010 openings and acquisitions have had a very positive impact on our overall performance in 2011. In the primary markets in which we operate we continued to benefit from high levels of demand. We are also pleased to report progress on delivering our development pipeline, which will add further value to the group in the near future.” The company, which listed as
Park Plaza Hotels when it arrived on the London AIM market in 2007, is also planning to revive the PPHE name. An extraordinary general meeting at the end of February sees shareholders voting on a proposal to rename as PPHE Hotel Group Limited. The change will help clarify the company’s association with the Park Plaza brand, which is owned by Carlson, but which PPH has exclusive rights to operate in 56 countries. However, its portfolio already includes other hotel activities, such as art’otel and Arenaturist. The former has hotels in Berlin, Cologne, Dresden and Budapest, and openings planned in London and Amsterdam. Arenaturist, which PPH has a stake in, is a leading holiday company in Croatia running 2,868 hotel rooms and apartments, and seven campsites. The PPHE name has long
been associated with Park Plaza, dating back to 1989 when PPHE Group and the Red Sea Group first worked together, taking over the Mandarin Park Plaza in Eindhoven.
Chinese plant the flag in New York and
Brussels Chinese airline Hainan Airlines has made clear its commitment to growing its hotels business, after an abortive start in 2011. In January it broke ground on a hotel investment in Belgian capital Brussels, and in February followed up by completing a hotel purchase in New York.
Hainan is part of HNA, a larger Chinese conglomerate with interests in several other Chinese airline companies, airports, hotels, logistics, tourism, retailing and finance. HNA has cast its eyes over
two major hotel opportunities in recent months, in Spain and India. Although ultimately backing out of both, they provide an insight into HNA’s appetite for international growth. And it appears to be modelling a business approach taken in previous decades by European and US companies that delivered the core of some of today’s major hotel groups. HNA’s earlier abortive sorties included a deal to acquire a substantial slice of Spanish hotelier NH Hoteles would have involved an injection of EU329.9m, and a potential tilt at Aman Resorts would have required a bid of more than USD300m. The Spanish deal, first mooted
in May 2011, unravelled towards the end of the year, with HNA apparently getting cold feet as executives watched the Eurozone turmoil. It may still lead to the Spaniards getting involved in
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