Print
	Email
	Text size
	Comment

There was a slight slowdown in the hotel sector during Q2 compared with the 17 deals reported by MAIN Index during the first quarter. Hotel groups and investment funds completed 11 asset acquisitions – several of which centred on Scotland. 

Mergers and acquisitions

The most active hotel group during Q2 was Swallow Hotels. The company paid £1.1 million for the Western Isles Hotel, a 28-bedroom hotel overlooking Scotland’s Tobermory Bay, as well as acquiring the Derwent Manor Hotel in County Durham for an undisclosed sum.

However, Swallow Hotels entered administration in September, and its hotels and pubs are now being sold or closed – the Derwent Manor Hotel has already been picked up by Oxford Hotels and Inn Management.

Q1’s most active acquirer stayed in the headlines during the second quarter. QHotels, an Alchemy-backed group, agreed a £9.35 million takeover of Ashford International Hotel in June.

Leeds-based QHotels offered 40.5p per Ashford International Hotel plc share plus £1.35 million for preference shares. The deal, which completed in early July, gave the company its ninth hotel.

Other active hotel operators included ABode, which bought The Rosetti in Manchester from Alias Hotels. The Greenhithe-based company plans to relaunch the hotel as ABode Manchester in early 2007.

Portland Hotels acquired the Jurys Hotel in Glasgow from Jurys Doyle for a sum reported to be about £10 million. Portland will spend £3 million on upgrading the 137-bed hotel, which will revert to its original name of the Pond Hotel and operate under the Best Western brand.

In May, hotel group Malmaison announced its purchase of Glasgow’s One Devonshire Gardens hotel for a sum rumoured to be about £9 million.

Not all acquirers were domestic. In July, US group Fairmont Hotels & Resorts teamed up with Apollo European Real Estate Fund II LP to buy Scotland’s St Andrews Bay Golf Resort & Spa for an undisclosed sum. The 209-room hotel was sold by Château Élan Hotels & Resorts in a deal backed by Bank of Scotland Corporate.

Indeed, several deals involved investors picking up hotel assets. The Royal Bank of Scotland paid almost £1 billion for a portfolio of 46 hotels in April. The portfolio was sold by a joint venture between leisure company Whitbread plc and hotel group Marriott International, which will continue to manage the hotels.

Also, Irish investment company Redquartz Ltd was reported to have bought a hotel in Santry Cross, a new residential development in Ireland’s Ballymun. The hotel will be run under the Days Hotel brand, the Irish franchise of which is part-owned by the Kelly family, also behind Dublin-based Redquartz.

Westbridge Hospitality Fund LP, an investment fund managed by Westmont Hospitality, bought 23 hotels from InterContinental Hotels Group plc. The deal was agreed for about £240 million and included 15-year franchise contracts with fees expected to be about £2.7 million each year. InterContinental started its disposal programme three years ago and has sold, or is in the process of selling, 175 hotels valued at more than £2.8 billion.

Finally, an unnamed private investor agreed to buy MWB Park Lane Hotel for £105 million in May. MWB owns the freehold of the 157-room five-star Marriott International hotel on Park Lane.

The property was sold by Marylebone Warwick Balfour Group plc, which holds a 70% interest, and The Sincere Company of Hong Kong. The group will use the proceeds to repay the £61 million debt it has secured on the hotel.

IPO

Hotel operator Maypole Group plc, formerly AJ Leisure Holdings plc, moved its shares onto AIM from Ofex in April. The group’s directors believe that joining the junior market will raise the company’s profile as well as providing a new source of finance.

The transaction gave Maypole a market capitalisation of more than £2.3 million after its shares were valued at 2.6p each.

Comments [0]