• Luxury draws buyers 

Belmond said it was “encouraged” by the interest that had been shown in its potential sale, as it continued to review the company.

The comments were made as the hotels acquired by Värde Partners from Boscolo Group last year were relaunched as The Dedica Anthology.

At Belmond, Roeland Vos, president & CEO, told analysts on the company’s third-quarter earnings call: “We believe that our brand remains uniquely positioned to meet the demand from investors and third-party owners in the market for a nimble, agile luxury operator.

“In the last 18 months, we have invested in the establishment of a development platform. We have a highly talented team now in place with the experience to capture opportunities across the entire deal spectrum, and that goes from whole ownership to pure management.”

Vos said that, prior to the strategic review, the company had secured five letters of intent giving it exclusivity in the advanced stages of negotiation, but that negotiations had been paused while the strategic review was underway.

The company reported a 21% increase on the year in Adjusted Ebitda, to USD75.1m, with revpar up 6%. The group reaffirmed its full-year guidance of revpar growth between 2% and 6% and full-year adjusted Ebitda of USD140m and USD150m, representing 13% to 21% growth over last year.

At Mandarin Oriental, the company continued to look for management contracts for growth, announcing three new agreements since the half year. In July, the Group took over management of a luxury resort on Lake Como, which will be rebranded as Mandarin Oriental, Lago di Como in 2019, following refurbishment.

A new hotel and residences in Moscow was scheduled to open in 2021 and a new luxury resort in Phuket was scheduled to open in 2022. The group will cease to manage Mandarin Oriental, Atlanta from 7 December, following the sale of the property.

The company said that overall results for the quarter were higher than the same period in 2017, despite the absence of earnings from Hotel Ritz, Madrid, which closed for restoration at the end of February.

The launch of The Dedica Anthology came after the deal in April last year which saw Värde acquire of over 90% of the Boscolo Group’s outstanding debt from its original lenders via nine separate transactions, alongside Deutsche Bank. Värde began acquiring the debt in the secondary market in mid-2016, following multiple attempted restructurings of the company. The Boscolo family retained Boscolo Tours, a domestic tour operator and Hotel Airone, a 97-room hotel in Chioggia.

The group appointed Stephen Alden, former chief executive of the Maybourne Hotel Group in August last year. Since then Alden has been working with Bain & Company and Interbrand to formulate a clear strategy, based, he said: “On the promise of a new form of curated, contemporary hôtellerie”.

The group told Hotel Analyst that it had plans to invest EUR100m over the next 30 months, with its hotels including those in Florence and Nice to be renovated.

Commenting on the name, the group said: “Our brand name is composed of two parts. The Italian word ‘dedica’ (deriving from the Latin dedicare: to dedicate) implies devoting one’s time to a particular purpose or assigning a work of art in someone’s honour – reflecting the sense of curation that is an intrinsic part of the brand, along with its focus on millennial-minded guests. As a noun, a ‘dedica’ is the handwritten, bespoke note that an author will pen on a book for a particular reader. We draw from this our dedication to making a personal difference to a guest’s experience of a city. The choice of ‘anthology’ as a companion describes the collection of unique stories represented by each of our hotels and their guests.”

The group told us that it was seeking to offer a vision of luxury travel more in keeping with the modern traveller.

The company will maintain the distribution agreement signed with Marriott International bringing the hotels under the Autograph Collection flag, while also looking to drive its own direct bookings.

HA Perspective [by Katherine Doggrell]: The Belmond call was one of the more disappointing in recent times, with the company on hold after receiving what we understand to be a fulsome volume of bids for itself, but not being able to talk about it. The analysts largely lost interest when they realised they weren’t going to get any juicy detail.

What seems likely is that whoever buys Belmond will pick up some saleable property, some mature hotels in Italy and a lot of hopes and dreams. As the launch – and imminent revamp – of The Dedica Anthology draws attention to Italy, we note that Marriott International is in a strong position in the country already. It is worth noting that Varde is not likely to see this is a long-term hold and we can expected these shined-up hotels to be returning to the market in around, oh, five years’ time. Good news for those missing out on Belmond.

Additional comment [by Andrew Sangster]: It is tempting to make fun of pretentious marketing, and the use of “hotellerie” is an easy target. But more serious is trying to understand Dedica’s larger plan.

It obviously needs the distribution muscle provided by Marriott but seems intent on trying to maintain an independent brand at the same time. This looks like, to use a much-overused phrase from another context, having your cake and eating it.

But maybe it can work for the benefit of both parties. Marriott’s global distribution coupled with a focused, local offer. But from an owner’s perspective, the question is whether paying fees for both brands makes sense? Is Marriott’s Autograph too weak to stand alone (doubtful) or is Dedica such an enhancement that the extra cost is justified (possible but challenging)?

Dual branding structures seem sometimes to work, most commonly in emerging markets, with a good example being India’s ITC Hotels where Starwood renewed its relationship in 2016 for 40 years. Hilton’s experience with Trident, also in India, where EIH ended the relationship in 2007, is a contrasting example.

Outside of emerging markets, it is less obvious to understand the advantages to both parties. In Italy, where Marriott, through Starwood, already has a big luxury presence, the Marriott system will no doubt be delivering significantly for Dedica but the cost is going to be substantial. Marriott is unlikely to have cut much of a deal given the risk of dilution to its other hotels.

So, what is really going on? Varde took control of Boscolo’s hotels in April 2017 through a loan to own approach that saw it swoop on 90% of Boscolo’s debt.

Plugging in the properties to Marriott’s effective system is likely to significantly enhance the topline but will impact the bottom line. If Marriott was unlikely to have cut its fee levels much, did Varde extract more flexibility when it came to length of contract? The only point of creating Dedica from Varde’s perspective is to offer prospective buyers of the chain an independent brand. And tieing the chain to Marriott for a lengthy period would seriously shorten the list of buyers.

Meanwhile, the bigger luxury prize of Belmond continues to tease would be suitors. For Belmond, hanging on for a bit longer should not harm its appeal, even if there is a modest market correction.

The secular winds are still filling luxury’s sails. The global growth of HNWIs and the preference for experiences over objects means the value of high-end experience businesses like Belmond is unlikely to diminish.

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