NH Hotels Group, which is now 91.4% owned by Minor International, said that it was working on a new business plan based on shared synergies.
Fellow Spain-based operator Meliá Hotels International used its own results to say that it was expecting strong results from the country’s cities, while anticipating competition from a recovering Egypt.
At NH Hotels Group, the company said that it had seen good performance from Benelux, Italy and Central Europe. The group saw revpar increase by 2%, drive by rate growth, with Ebitda up EUR17m, or 10% on the year, to EUR187m for the first nine months of the year. NH reiterated its guidance for Ebitda of EUR260m for the full year.
During the period the group opened nine hotels, in Europe and Latin America and refurbished 16 hotels, in Germany, Austria, Spain, the Netherlands, Italy, the US and Colombia.
CEO Ramón Aragonés, said “Quarter after quarter we continue to beat the profitability and deleveraging guidance we had committed to, thus making the most of the improved business momentum and enhanced financial liquidity and evidencing our efficient business management. The solidity of our business model coupled with the potential for synergies via our new shareholder Minor International will allow us to face the upcoming years with greater guarantees of success.”
NH confirmed that Minor now held a 91.4% stake in the group. In a filing on the Spanish bourse last month NH made it clear that, should the Thai-based company acquire more than 55%, it would consider different alternatives, including offering NH shares to strategic partners or maintaining a higher percentage with the issuance of perpetual bonds. A bank guarantee of EUR1.4bn was provided by Bangkok Bank Public Company, which would secure a total of 73.5% of NH.
Hotel Analyst understands that a buyer has been agreed for the balance of shares at NH.
Minor said that it would work with NH to support its “long-term vision” to “execute its plan and take advantage of value creation opportunities”. It added that it would work with the board “to enable management to continue executing day-to-day functions as well as creating the next long-term strategic plan”.
Minor identified a number of value-creation opportunities, primarily the creation of “leading Asian-European Hospitality platforms, with an asset-right portfolio of brands that are strong in their respective geographical footprint, and established presence across Asia, Europe, Australia, Middle East, Africa and the Americas”.
The results came as Grupo Inversor Hesperia fulfilled its promise to rebrand properties away from NH Hotel Group, announcing a strategic alliance with Apple Leisure Group to operate its four resorts in Spain with the AMResorts brands. ALG will oversee worldwide sales and marketing of the properties under the leading brands of AMResorts, beginning in 2019.
It was the first agreement by GIHSA after its decision to terminate the management agreement it had with NH, following the latter’s change in management.
“We are highly satisfied with the agreement reached with ALG, which raises our hotels’ profile to another level, and will allow us to attract new clients from around the world through the AMResorts’ brands. With this alliance, we officially start a new path within GIHSA’s growth and expansion plan,” said Jordi Ferrer, CEO of GIHSA.
The company has not moved too far from NH Hotels Group, which last year signed a deal with AMResorts to open hotels and resorts in Spain, building on their relationship sealed seven years ago when the pair opened three sites in the Dominican Republic.
“This alliance is the result of a long-standing relationship between both companies. The result is an attractive hotel partnership model, which has already proven successful in the Caribbean, and we will leverage each company’s strengths,” said Aragonés at the time.
At Meliá Hotels International, the group continued to pursue growth through management contracts.
The group opened 17 new hotels opened in the year to September, all but one under management agreement. Ebitda excluding capital gains grew by 5% in the third quarter compared to the same period in 2017. In constant currency terms, revpar in owned and leased hotels improved by 2.9%.
Gabriel Escarrer, EVP & CEO: “Our commitment to a model that prioritises adding hotels under management agreements is also beginning to bear fruit, providing us with increasing revenues from management fees and maximising our scale and structure in different markets. I am proud to highlight the positive performance of the group in the first nine months of 2018, despite the competition from recovering destinations in North Africa and Turkey and the fall in bookings by northern Europeans caused by the exceptionally good weather they have had this summer.”
HA Perspective [by Katherine Doggrell]: That deal with Hyatt seems so far away now, further as the deals trucks thunders off towards Belmond and NH is now faced with conjuring yet another business plan to work with yet another new owner – plus another new, as yet unidentified owner, which is likely to have close links with Minor.
GIHSA ran to the hills after, well, having failed years ago to take over NH itself, but also while pointing to the debt which Minor would expose NH to, which is less so if the Thai group sells down to the 51% to 55% it feel comfortable with. It is unlikely at this point that another party will want to come in and shake NH up yet again.
The point being for NH, presumably, that investors are looking at NH and Meliá and the work they have done clawing themselves out of indebtedness and raising the quality of their estates and thinking that they fancied a bit of that. As other markets around Spain recovery, both companies are looking further overseas, as NH’s agreement with Apple illustrates. No great wonder GIHSA is staying close.
Additional comment [by Andrew Sangster]: Europe’s biggest hotel market, Spain, is evolving at a rapid pace. A few decades ago, the market was controlled by tour operators who dictated terms to the country’s hoteliers. The boot is now firmly on the other foot.
But this maturing of the market has also created challenges. Whereas Spain was once a location for cheap and cheerful holidays, it is now a much more sophisticated – and expensive – prospect.
Rather than be in the volume game, Spain’s resorts are now about quality. Although volume is not dropping dramatically, the days of rapid growth look to have gone.
This structural shift is being accompanied by a maturing domestic economy, currently the fastest growing of Europe’s major economies. Domestic demand for hotels, focused on business and leisure travel rather than resorts, is thus rising at a clip and not surprisingly Spanish hoteliers are eyeing this an opportunity.
Minor is now a dominant player in domestic Spanish travel. As this market evolves, the question will be whether Minor can grow to become a major player in Europe’s hotel industry or whether it will be displaced by the bigger players.