Minor Hotels’ global push following Tivoli buy
BANGKOK—After closing the largest hotel deal in Portuguese history, the 2 February buy of Tivoli Hotels & Resorts, Thai firm Minor Hotel Group is looking to further leverage its recent expansion onto the global stage, according to CEO Dillip Rajakarier, who also is COO of parent company Minor International.
Speaking to Hotel News Now, Rajakarier said Minor has its sights firmly fixed on Europe.
“In order to create shareholder value, what with some of the headwinds we’ve recently had in Thailand, we ventured in other parts of Asia, the Middle East, Africa and big time into Australia,” Rajakarier said. “The next step was to look at other destinations, and with the Tivoli
deal, we not only added 14 hotels but two continents. We will leverage that into expansion in Europe. The euro is fairly weak, and we can seize the opportunity.”
The Tivoli purchase for €294.2 million ($327.9 million) gives Minor 12 hotels in Portugal and two in Brazil.
“It will be very accretive to our earnings, so we’re looking at other deals,” Rajakarier said. “Europe is still a good deal, although London is overpriced. Tivoli will create for us a platform in Europe.”
Rajakarier said the deal underscores Minor International
’s emphasis on the hospitality segment. The company has three core businesses: hotels, food and retail.
“The hotel segment brings in 65% of profits, whereas 30 to 40 years ago, the dominant segment was food,” he said. “Back then we only had a handful of (hotels); in 2007 we had 10; in 2009, 30; and today, 145. The goal is to have 210 within the next five years.”
The group has six brands it owns and manages, including 5-star Anantara and Per Aquum and 4-star Avani, and also manages hotels on behalf of other brands, notably Four Seasons, St. Regis, Marriott and Radisson. The company also owns and manages a couple of high-end safari camps in Kenya and Tanzania.
The Tivoli purchase is perhaps the most important stepping stone in Minor Hotel Group’s current evolution, Rajakarier said.
The buy was complicated by the collapse of Banco Espírito Santo, the Portuguese bank that was administering the Tivoli chain.
“The Tivoli deal was a senstive and complex deal,” Rajakarier said. “Initially, we started being interested in the chain before the bank collapsed. That was 2014, and the bidding process was not abnormal, with lots of bidders, of which we were one.
“We were selected as the most preferred bidder, and in July (2014) we were almost there in terms of finalizing the deal, which is when the bank went into liquidation. After that, it was a rollercoaster ride, dealing with receivers, and the entire deal changed, with the assets going through (the Portuguese equivalent of Chapter 11 bankruptcy).”
That was just the beginning of the unravelling, Rajakarier said, who added that Tivoli’s hotels were still operating throughout the negotiations.
“At that point of the process, the deal was split into four parts: the two assets in Brazil, owned by another company not in liquidation; another fund (formerly administed by Banco Espírito Santo) with four hotels all leased to Tivoli; a single asset in much the same deal, and the last seven parts of Hotels Tivoli SA in administration, which also required (Chapter 11 restructuring),” Rajakarier said.
“So, we did a restructuring plan and awaited (approval), but just as we were about to complete, (a Portuguese) judge put a seizure on the process, so we then needed to deal with the prosecutor,” Rajakarier said. “That was in December 2015, and we persuaded him any new assets would not go to the old shareholders. We said Tivoli’s employees would lose their jobs, as we would walk away.”
Rajakarier explained that the judge lifted the seizure just before Christmas, and the deal was closed on 1 February.
“I was (in Portugal) almost every month, but it was worth it to go through the pain,” he said. “This is what Minor is good at. We’re very careful and disciplined, where others might have walked.”
It is that discipline that assures Rajakarier that Tivoli will expand into Africa, too.
“We see with Tivoli potential in Africa, especially Portuguese Africa, Angola and Mozambique, where we already have five properties,” he said. “Tivoli as a brand is 83 years old, one of the oldest in the world.”
In South America, Rajakarier said he is aware of the continent’s instability, but he added he sees it turning around there and in Africa, too, possibly even by the end of 2016.
“South America has its ups and downs, but it will come back quite strong,” he said. “Yes, the currency has taken a dip, but in terms of local currency, Brazil’s hotels are doing well. When converted into (United States) dollars, then you are losing in (foreign exchange) translation, but there remains lots of potential.”
Rajakarier said Minor also has expansion plans in their home country, Thailand.
“Thai hotels are booming, and we’ve seen large increases in demand from India and the Middle East due to increased airlift,” Rajakarier said. “As far as the cycle is concerned, in Thailand or elsewhere, your guess is as good as mine.
“Every year Thailand has had some challenges, be they political or because of floods or bombs, but the country is very resilient. It always turns around, and we did have a fantastic (fourth quarter 2015). The country expects 30 million tourists this year.”