• Rezidor’s change at the top

Rezidor Hotel Group announced that Wolfgang Neumann was stepping down, to be replaced by Federico González-Tejera, the former CEO of NH Hotel Group and, briefly, global CEO, Carlson Hotels Group.

Rezidor and Carlson Hotels will create a global steering committee, chaired by González, to “provide overall strategic direction to both companies”.

Neumann will remain on the Rezidor board as a non-executive director and tweeted that he had been “Honoured to serve Rezidor for six great years” and that it was an “ideal time for me to transition to advisory board mandates and serve on the Rezidor board”.

González was appointed CEO of Carlson Hotels in February this year, but will be replaced there by John Kidd, former president & COO, HNA Hospitality Group, the owners of Carlson and majority owners of Rezidor.

González said: “Rezidor is in a strong competitive position, I look forward to building on the impressive results that Wolfgang and his team have achieved.”

In a blog on the company’s website, he added: “We are living in a challenging yet exciting era of disruption and global change. The Rezidor team has always embraced change as an opportunity, rather than an obstacle.”

Both Carlson Hotels and Rezidor will continue to operate as independent entities. The changes follow HNA’s failure to acquire the full shareholding in Rezidor, after it had been required to make a bid following its acquisition of Carlson, which held the majority stake in the Swedish group. It currently holds 70.4% of the group.

Charles Mobus, director, Rezidor board and director, Carlson board (and former NH Hotel Group chairman) said: “Rezidor and Carlson Hotels share a rich history, and their partnership remains an important component to both companies’ global success.

“This new strategic approach will enable both Rezidor and Carlson Hotels to deliver improved results by better capitalising on their existing relationship and maximising the potential of their combined international footprint.”

HNA holds a majority share in NH Group, but currently has no representation on the board. Mobus and González were removed from the board at NH Hotel Group last summer, after the group’s AGM, at which activist shareholders Oceanwood Capital and Hesperia took control of the board, driving a vote by the “overwhelming decision” of shareholders that there was a conflict of interest with HNA Group board members.

The news followed Rezidor’s announcement of what the group described as its strongest first quarter since 2008, with revpar growth of 7% for the group and 10% for leased hotels, supported by good performance in March due to more favourable timing of Easter. Revenue increased by 7.5% to EUR222.5m.

Pointing to the group’s long-term asset management strategy, which has seen them exiting loss-making properties or re-negotiating lease agreements, Neumann added: “Last year’s exits of loss-making hotels also contributed positively to the overall results. Top line growth combined with good conversion made this quarter the strongest first quarter since 2008 underlining the traction in turnaround momentum and margin improvement”.

The quarter was also strong for signings, contracting almost 3,200 rooms (compared to 2,000 rooms in the first quarter 2016), driven by Eastern Europe and the Middle East and including a 1,500 room Park Inn by Radisson in Makkah, Saudi Arabia. With the signing of its first lease since 2009, the group we will enter Geneva with the Radisson Blu brand.

Commenting on HNA, Neumann said that the company look forward to “accelerating our development and growth together with HNA”.

Last year what has been a busy year for HNA Group. Most-recently the company paid USD6.5bn for a 25% equity interest in Hilton Worldwide, acquiring the stake from Blackstone Group.

HNA has agreed to restrictions on its ability to sell any of its interest in Hilton for a two-year period, and to limitations on buying more than 25% of Hilton’s outstanding shares, without the operator’s consent. The agreement allows HNA to appoint two directors – one HNA member and one independent member – to Hilton’s board.

Hilton’s results saw Chris Nassetta comment that he believed the “strategic partnership will be mutually beneficial as both companies leverage their networks and relationships”.

 

HA Perspective [by Katherine Doggrell]: When it was first reported back in the beginning of last year that Carlson might be in play, observers close to the situation suggested that Rezidor might like to buy it.

They commented that it would be a “complex, messy deal”, adding “Carlson’s revenue stream is not so huge – it might look like Carlson is bigger, but Rezidor has leases. Rezidor has a very strong balance sheet, but I don’t think the Rezidor management wants the Country Suites and the Radisson hotels in the US. It would love the Asia business and the control of the master franchise agreement.”

HNA, which has been burned by complex and messy events at NH aspired to bring the two together and, with its CEO placement and strategic board has, in essence if not actuality, done that. What this means for NH, which had widely been tipped to join Rezidor, will no doubt play out over the next year, with HNA largely quiet on that front, although we understand it continues to keep a couple of executives poised in Spain.

As for Carlson and Rezidor, another source on the fringe told us this week: “It’ll never work”. The pair share brands, but not ownership beliefs, with Carlson – and HNA – favouring minimal cash in bricks for its brands. While Rezidor has been revisiting its leases, its deal in Geneva illustrates that it is opportunistic when it comes to its balance sheet – a principal which has put it in the enviable emerging markets position it is today.

Share →