The tidying up of the UK four-star sector is continuing apace with predators such as private equity firm Permira leading the charge.
Last week, Permira, via its Principal Hotels vehicle, tucked away the £11m acquisition of Hawkstone Park near Shrewsbury, less than a month after buying Rocco Forte’s St David’s Hotel in Cardiff for £32.5m.
Far bigger deals though are being contemplated as the segment at last begins its much heralded consolidation.
Currently up for grabs is the Dawnay Shore Hotels portfolio which is tipped to sell for between £550m and £600m. DSH last week said like-for-like EBITDA was up 2% after being hit by rising energy costs. Without the fuel price hike, the EBITDA rise would have been 5% the company said.
Permira is in the running for this chain after missing out on De Vere last year in the£1bn bid battle eventually won by AHG. Also eyeing DSH are Starwood Capital, Dubai International Capital and Piccadilly Hotels, the JV between Robert Tchenguiz and aAim that bought Menzies.
Last month the sale of 28 hotels managed by Thistle went through for around £400m. Hotel Properties II, a JV between Andy Ruhan’s Bridgehouse Capital, Morgan Stanley and Thistle sold the 4,067 rooms located across the UK.
The buyer was CIT, a property investment specialist based in Curzon Street, London. The vehicle used to buy the portfolio was Curzon Hotels and it is supported by guarantees from Thistle and Lloyds TSB. Thistle’s management contracts, signed for 30 years in 2002, remain in force.
Gerard Nolan, of Savills, the adviser to HPII, said: “These regional Thistle hotels need a new injection of capital to contend with the competition being created by Rezidor, Hilton and Marriott. The portfolio has approximately two million square feet with numerous development angles.”
The premise behind these comments is that the international brands are making the running in this segment but by seeking out opportunities at individual properties, CIT can drive a healthy return.
Thistle’s main push is to exploit gambling opportunities. Across its entire portfolio, including these 28 hotels, it had been awarded at the start of this year 25 Certificates of Consent to open casinos.
The focus for the other four-star operators, however, is mostly in the conference market. De Vere is merging itself with the former Initial Style Conference Centres which AHG bought prior to the De Vere deal.
Principal too is keen on conferencing, citing this as an area it wants to exploit at St David’s, its first five-star property.