Minor International announced that it would be an 8.6% shareholder in NH Hotels Group after paying EUR192m for 30 million shares formerly owned by Oceanwood Capital.
The deal came after last year’s investment in Corbin & King, which it said would “transform its hotel restaurants into an attraction that draws the crowd and accelerate growth of the hotel business”.
Minor International said that the acquisition marked a move deeper into Europe following its earlier expansion into Portugal and Brazil through the acquisition of Tivoli Hotels & Resorts in 2016.
Dillip Rajakarier, CEO, Minor Hotels, said: “This investment represents a significant milestone for Minor Hotels. We are excited by the opportunity to accelerate our global exposure with our investment in NH Hotel Group, which has a highly complementary business and asset portfolio to Mint.
“The investment is financially attractive, with high liquidity on the Madrid Stock Exchange and proven performance by the business. Over the past few years, NH Hotel Group’s board of directors and management team have re-invigorated the business and delivered strong business performance in line with its five-year strategic plan.
“As a key shareholder in the business, we look forward to supporting the management team as a strategic shareholder to continue this success and build long-term shareholder value for NH Hotel Group and its shareholders including Mint. Mint can also support the NH Hotels with its food & beverage expertise where appropriate to maximise financial performance and enhance customer experience.”
No management changes at NH Hotel Group were expected in connection with Mint’s investment in the company. NH said: “NH Hotel Group does not intend to make any additional comments regarding this agreement reached between Oceanwood and Minor Hotels. We remain focused on our strategic business plan.”
Prior to the sale Oceanwood Capital had a holding of 12.1%. The group first became involved in NH Hotels Group in 2015, when it picked up a 7.58% stake as part of a sale by Banco Santander, at EUR5.17. The group then began stakebuilding, reaching a peak of 50.11 million shares, or 14.3% on NH, in August last year, at which point the share price was just below EUR6.0, the group having varied between a year high of EUR6.71 and EUR4.80 at the time of writing.
The acquisition came as HNA Group was marketing its stake in NH Hotels Group, with Minor commenting that, while certain key shareholdings of NH Hotel Group may change ownership in the near future, it was “confident in the underlying business”.
Minor recently reported its first-quarter results, commenting that it expected to see strong performance from its hotels for the full year.
William E. Heinecke, Minor International chairman & CEO, said: “Despite the decline in net profit for the quarter, we are confident that we will deliver 2018 full year net profit growth with continued strong performance of our hotel business.”
For the first quarter, the hotels division, Minor Hotels, reported net profit of Baht 1,141m (GNB26m), and an increase in net profit of the core hotel operations of 47%. The company said it saw “robust” tourist flows and strong performance of hotels both in Thailand and overseas, with overall revpar of its owned hotels, which accounted for 61% of hotel & mixed-use revenues, growing by 13% in the period.
The Portugal portfolio delivered revpar growth of 45% year-on-year, led by the hotels in Lisbon and Sintra areas. The performance was attributed to the company’s revenue management and marketing strategy after a series of hotel renovations.
The management letting rights portfolio, contributing 17% of 1Q18 hotel & mixed-use revenues, saw strong demand with occupancy rate of 78% and ADR increase of 4% year-on-year.
The revpar growth for the entire portfolio, including managed, was flat year-on-year, with solid performance of owned hotel operations both in Thailand and overseas helping to offset the temporary slowdown of managed hotel portfolio. Including new hotels, system-wide revpar of the entire portfolio decreased by 2% year-on-year, due to the lower revpar commanded by the group’s new hotels.
The company said that it continued to look for opportunities to invest in “complementary businesses to strengthen its organisational capabilities”.
At the end of 2016 Minor Hotels said that it was planning to add at least 50 more properties to its portfolio over the next five years, with the Anantara brand’s first foray into Europe and the launch of two new Tivoli properties in the Middle East.
Michael Marshall, chief commercial officer at Minor Hotels, said at the time: “We are looking at new locations and destinations. We already have 37 Anantara properties but we want that to grow to 60 and 10 of those locations a re already being plotted and planned. The group has 155 hotels and we aim to grow that to between 200 and 230 within the next five years.
“We want to grow Anantara, Tivoli and Avani – all are so distinct from one another and each has so much opportunity for expansion.”
The end of last year saw Minor Hotels’ purchase of a “significant stake” in Corbin & King, for GBP58m. The group said that the investment was “part of the company’s efforts to accelerate growth beyond its core hotel business. Through collaborations with Corbin & King, Minor can leverage on their expertise to beef up its hotel F&B capabilities and transform its hotel restaurants into an attraction that draws the crowd and accelerate growth of the hotel business.”
The beginning of this year saw growth in the company’s managed business, with the signing of a management agreement with Allied Investment Group to operate Oaks Beirut.
Scheduled to launch in mid 2018, the 110-key hotel will be located in Sodeco, a commercial area of Beiru. The brand’s portfolio currently comprises 56 properties across five countries – Australia, New Zealand, Thailand, India and the United Arab Emirates, with more than 6,000 guest rooms under its management.
In total across the Middle East region Minor Hotels operates 13 properties across four of its brands – Anantara, Avani, Tivoli and Oaks – and has a further strong pipeline in the region across these four brands.
HA Perspective [by Katherine Doggrell]: So (almost) farewell to Oceanwood Capital, one of the key agitators in the skirmishes at NH Hotels Group which kept us greatly amused and did a lot of push HNA into the position where they decided to sell their stake.
Whereas this time last year the popular money was on NH being folded into the then-Rezidor and hence Radisson, now an intriguing new future opens up. Minor seems happy to take a stake whatever the future holds, which seems a bold move, but maybe it knows something we don’t. The latest speculation suggested the HNA’s stake was being fought over by Elliott Management and Apollo Global Management to name but two. Sources close to us have speculated that AccorHotels could be planning to swoop on NH, a much-repeated rumour.
For Minor, tagging along for the ride would have the potential to accelerate its position in Europe with far more vim that through NH alone and for AccorHotels, which has spoken much of its need to beef up its luxury arm, having access to Corbin & King may not be the worse thing which ever happened. There is suggestion, however, that Minor could take itself from minor to major and pick up the stake itself.
Additional comment [by Andrew Sangster]: Bloomberg broke a story at the end of last week that Barcelo were also in the fray for the 30% held by HNA. Barcelo, who is working with advisers Alantra Partners, is reviving its earlier effort to create a Spanish “national champion”.
With Elliot Management, the hedge fund currently trying to put the thumb screws on Whitbread, and opportunity fund Apollo also in the fray, it looks likely that a fully fledged takeover battle will ensue which will delight HNA.
Will the strategic advantages of an existing industry players like Minor or Barcelo win over the short-term financial opportunism of financial funds? At this late-cycle stage, logic would dictate that the industry players have the upper hand given that they have the longer term view. But the wall of money is such that the funds may be driven to deploy come what may.