The beginning of 2014 saw two luxury hotel groups underline their authority as owner-operators in the London market. Millennium & Copthorne acquired the Chelsea Harbour hotel, dislodging incumbent brand Wyndham in the process. And Indian-based Taj has decided now is the time to hoist its own flag on a Victoria hotel it has owned for many years.
M&C paid GBP65m to buy the Chelsea Harbour hotel, purchasing it from Irish seller Harcourt Developments in a transaction expected to complete in the first quarter. The deal gives M&C a long leasehold on the building, with around 98 years remaining. The property has 154 rooms and four penthouses, and is set within the luxury Chelsea Harbour development, which was completed in the late 1980s and contains luxury apartments, offices and the hotel around a marina.
The addition brings M&C’s London presence to eight hotels. It has Millennium branded hotels in Mayfair, Knightsbridge and two in Kensington; adjacent to Chelsea football ground is a Millennium and a Copthorne, while there is also the 833 room Copthorne Tara hotel in Kensington.
M&C Chairman Kwek Leng Beng commented: "We are delighted to be acquiring this property which will fit very efficiently into our existing portfolio of London properties. The Chelsea Harbour is one of the few hotels in the city to offer all-suite guest accommodation, and is situated in a prestigious riverside area that will be going through further transformation and improvement in the near future." Work started on the adjacent Chelsea Waterfront development, which will replace a derelict power station, last September.
For Wyndham, the loss of the Chelsea Harbour hotel from its portfolio means the group now has no luxury hotel presence in the UK capital at all; and just two budget Days Inn hotels in the central area of the city.
Taj has opted to rebrand a hotel in St James’s, along with an adjacent block containing long stay suites. The buildings have been owned by Taj for many years, but have until now been operated under IHG’s Crowne Plaza flag.
Now branded as St James’ Court, a Taj Hotel, the 340 room hotel, and adjacent 86 suites at 51 Buckingham Gate, have been in the group’s ownership since 1982, but never to date operated under the Taj name. As part of the rebrand, Taj will be spending on a refurbishment of the lobby, reception area and restaurant, adding private dining space, with work taking place during this year.
"This important re-branding comes at an exciting time for the increasing strategic links between India and the UK,” said Taj managing director Raymond Bickson. “We are delighted to have the opportunity to restore these iconic hotels that have more than a century of heritage."
The move recognises two key changes in the strengthening of links between the UK and India. Indian investors have made major inroads into the UK market, with Tata group, parent of Taj, owning major steel production plants, and the Jaguar and Land Rover car brands and manufacturing facilities in the UK. And Taj London general manager Digvijay Singh said that putting the Taj brand in front of UK consumers is also important: “Today, the UK comprises 12% of foreign tourist arrivals to India, the home market of the Taj Group. Europe is the primary source market for corporate and leisure travel across the Taj Group, led by the UK, which contributes over 2 million room nights across the group.“
An IHG spokesman commented: “Taj Group have wanted to have their own brand in London for some time. This exit has been planned for over a year in accordance with a termination provision previously agreed, and took place in an amicable and orderly fashion."
The increased interest in building Taj’s international portfolio follows parent company Indian Hotels abandoning its latest attempt to take over Orient-Express, which could have given the group a European hotel presence. The decision to quit the attempted takeover was made in November 2013 when, despite having built a 7% shareholding, Indian Hotels found its bid strongly rebuffed by Orient-Express management.
HA Perspective: [by Katherine Doggrell] London, and those wishing to invest it in, seems to have an unlimited appetite for luxury. According to a study released last month by real estate portal LuxuryEstate.com, London now accounts for 13.5% of all searches on its website focused on hotels for sale, ahead of all other locations (Zurich is next with 10.82%).
So great is the demand and so limited the supply that Taj has seen fit to expand its own portfolio by taking back its own hotel, a novel move and one which London-located brands will be hoping doesn’t catch on amongst owners. There have been concerns of late as to the sustainability of demand in London’s luxury market, something which Taj has again side-stepped by taking over existing room stock.