The Hoxton brand could expand globally after potentially receiving a USD1bn investment from Bharti Group.
The brand, which is owned by Ennismore, is planning to add two hotels in the US and two in London by 2020.
Ennismore declined to comment on the speculation, which suggested that the funding would come from Bharti Group, which owns Bharti Airtel, a global top-three mobile phone company. It was founded by Sunil Mittal, whose son-in-law, Sharan Pasricha, founded Ennismore.
Over the past few years, Bharti has diversified in the Indian economy. The group offers life insurance and general insurance to customers across India as well as launching a fresh and processed foods business. The group has growing interests in other areas such as mobile internet, real estate, training and capacity building, and distribution of telecom/IT products.
Bharti Realty, which was launched in 2015, has a mix of offices, residential and retail investments.
The Hoxton brand has been building slowly since the first site was opened in Shoreditch in 2006, followed by a property in Holborn in 2014, Amsterdam in 2015 and Paris in 2017.
Hoxton is developing hotels in New York, Los Angeles and Portland with plans to start opening some of them this year. By 2020, the firm expects to add locations in Chicago, San Francisco and in Southwark and Shepherd’s Bush.
Ennismore also acquired the 232-room Gleneagles resort in Scotland in 2015 and earlier this year announced the first hotel under its NoCo brand, which is due to open in 2019, in the Wood Wharf mixed-use development in London.
Ennismore has agreed to lease around 100,000 square feet on a 25-year contract from Canary Wharf Group. The hotel will be arranged over the ground floor and levels four to nine. The first NoCo hotel will have 312 rooms offering “honest pricing, clever design, beautiful essentials and a focus on technology”.
NoCo, which the group said was aimed at challenging “the status quo of budget brands”, with a target of up to 25 sites in seven years, was launched in 2016.
Ennismore said that booking and check-in would be via an app, with rooms “compact yet comfortable”. In an echo of concepts such as Mama Shelter, bars and eateries “will be destinations in their own right”. Each NoCo site will have 150 to 200 rooms, with nightly rates under GBP100.
The company was looking largely at leases, with potential for management agreements. The company told Hotel Analyst that it would want to fully establish the brand first before considering franchising.
Ben Russell, acquisitions director, Ennismore, told us: “It’s very early days and we are in discussions with a number of very progressive developers and landlords who are looking to partner with an hotel operator that will bring a unique proposition to their schemes and act as a place-maker.
The company was not concerned around cannibalising its Hoxton brand. Russell said: “With land prices in central cities at an all-time high, it is highly unlikely that a NoCo will operate in the same space as a Hoxton.
“NoCo is a completely separate entity – we like to think of it as the Hoxton’s cheeky younger sibling. The NoCo concept was created to challenge the existing ‘vanilla’ offering in the budget sector in key cities in the UK, where leisure and corporate guests have limited choice and the offer is limited to a place to sleep and very little else.
“NoCo will challenge this through great design, vibrant public spaces that feature exciting a local food and drink offering, live music, and events that appeal to guests and locals alike. By taking learnings from The Hoxton and applying these to NoCo we will be able to ensure that the new brand can deliver on these objectives, while still being accessible and affordable.
“The hotel sector remains incredibly competitive, with considerable interest for top sites. NoCo offers an entirely different spin on the budget sector: we are creating a space where guests and locals will genuinely want to visit.”
HA Perspective [by Katherine Doggrell]: The possible investment by Bharti Group is thought to have provoked not a little controversy in India, where it is felt that USD1bn could be better spent on investments other than lovely hotels for those who perhaps don’t suffer too much.
But away from the question of whether trickle down is more effective than direct, would this be a good investment for Bharti? Hoxton has shown itself to be no fly-by-night and we watch NoCo with interest, but, as ever with any hotel which has funny-coloured chairs and the likelihood for exposed concrete, the question is, can it be scaled.
The usual rebuttal for this argument is staffing. There aren’t enough staff to make everyone feel loved and cosseted once you hit 20 sites, so it goes, an argument which one observer, who declined to be named (the boutique hierarchy is small and long of memory) rebuffed as nonsense. Finding staff to run a budget site is an issue. Finding motivated hospitality graduates for a brand such as Hoxton is closer to the fish/barrel/shooting scenario.
The main issue in this sector is one of fashion. The hip is only hip for so long – even brands such as The Standard are not impervious. But so what? There are plenty of wannabes who will be happy to stay there long after those on the cutting edge have vacated. But, as the hotel falls down the pecking order, the risk is that the rate will fall to match it. This is less of an issue for the Hoxton, which has made its name on competitive pricing.
The fact is that no-one has managed it yet. As our mystery observer noted: “We wake up every morning in this industry determined to succeed, to do what no-one else has done before”. Maybe USD1bn will help with that.