Article Summary: After standing pat for much of the consolidation wave following its late-2014 buy of Kimpton, InterContinental Hotels Group has acquired Six Senses Hotels Resorts Spas, which becomes IHG’s second recent luxury acquisition after Regent Hotels & Resorts.
After standing pat for much of the consolidation wave following its late-2014 buy of Kimpton, InterContinental Hotels Group has acquired Six Senses Hotels Resorts Spas, which becomes IHG’s second recent luxury acquisition after Regent Hotels & Resorts.
Primary Category: Transactions
GLOBAL REPORT—InterContinental Hotels Group continues to reshape its premier luxury offerings as the Denham, England-based company has acquired Six Senses Hotels Resorts Spas for $300 million.
The deal, which does not include any real estate, sees Six Senses’ management and portfolio of 16 hotels join IHG, along with 18 management contracts in its pipeline and an additional 50 in active discussion, according to a news release announcing the deal. The seller is Greenwich, Connecticut-based Pegasus Capital Advisors.
IHG executives were not available for comment but will address the deal during the company’s full-year results announcement on 19 February.
Bernhard Bohnenberger, president of Six Senses, told Hotel News Now that he is excited by the deal.
“The sale will only make Six Senses stronger,” he said. “IHG is a world-class hospitality company, and the sale provides Six Senses with access to a dynamic group of business experts, plus additional tools, systems and analytics.
He said with IHG, Six Senses’ development pace will pick up.
“If anything, Six Senses will be poised for greater success and able to fine-tune programs and grow the existing pipeline,” Bohnenberger said. “We feel confident that with our current teams in place and the added support from IHG, we will be able to successfully grow to 60 hotels in 10 years. We’re not saying it will be an easy feat, but we think we’ll have the right support systems to make it a reality.”
Bangkok-based Six Senses will open its latest asset, the 40-key Six Senses Krabey Island, Cambodia, on 1 March. The brand is increasingly moving into opening urban assets, such as a forthcoming property in Manhattan.
Other new resorts include one in Bhutan and another in Rajasthan, India, and additional signings are in Austria, Brazil, China, Spain, Switzerland, Taiwan and Thailand.
IHG now has four brands in its luxury portfolio: Six Senses Hotels Resorts Spas; Regent Hotels & Resorts; Kimpton Hotels & Restaurants, and InterContinental Hotels & Resorts. In November, the company’s InterContinental brand opened its 200th asset, the 336-room InterContinental Shanghai Wonderland.
All told, IHG’s luxury component now consists of approximately 400 open and pipeline properties.
IHG also assumed management of 14 U.K. properties Starwood Capital Group sold to Covivio, the French real estate investment trust formerly known as Foncière des Régions. Some of those properties sat within Starwood Capital’s Principal brand, with IHG announcing several would be converted into Kimpton assets.
Piers Schmidt, founder at hotel consultancy Luxury Branding, said that until recently, IHG was not strongly represented in the luxury sector.
“It remains to be seen if Kimpton really will be a global brand, but (the buy of) Regent is a clear sign of intent, and one understands (IHG) wants to compete, but Six Senses is a different animal,” Schmidt said. “What it has done in six or seven years under (CEO) Neil Jacobs is pretty remarkable.”
Schmidt said Six Senses has grown into an impressive company, but consolidation is always accompanied by some risk.
“Yes, (Six Senses) has been under the wing of a pretty beneficent public equity company, but still, it has grown into a solid first-class entity,” he said. “My fear as always with this kind of consolidation is that despite all the good intentions, when independent brands get gobbled up, after the end of a honeymoon period, their special qualities, the golden egg, get eroded.”
Liv Gussing Burgess, managing director of Luxury Hotel Consulting, said IHG’s Six Senses deal is another move in the general trend of creating experiences for guests, which, at the very highest end of the sector, need to be more unobtainable.
“It goes beyond the element of price and the buying of something,” she said. “It is a break from daily life, an intangible. Luxury, of course, is subjective, so at the top end it is not about amenities but memories that can be shared with spouses and families.”
Six Senses’ Bohnenberger said he is not worried the brand will lose its identity as part of IHG.
“We think (consolidation) can only be a positive, because it gives smaller brands a far wider reach and more growth potential due to extensive resources which are made available to them,” Bohnenberger said. “That is why IHG bought Six Senses. They have no intention of changing what makes Six Senses so unique. It is very clear that they want to support the brand and help us to share the Six Senses experience in more urban and resort settings.”
Burgess is a former GM at two Aman Resorts properties in Indonesia and Thailand, and she is working with an owner on the opening of the upcoming Six Senses Shaharut in Israel. She said the Six Senses deal is a new landscape for IHG, a move into small, beautiful resorts in gorgeous locations.
“A lot of their other brands are perfectly fine, but might be regarded as predictable, so with now everything being so much more accessible, how do these large chains continue to differentiate?” Burgess said.
With the deal in place for Six Senses to join IHG, Schmidt said the brand is taking a different next step from its most direct competitor, Aman Resorts.
“Six Senses has probably not beaten their drum enough in the last few years, because it has created something quite special,” Schmidt said. “Some might argue it is not in the same league as Aman, but I would say that is not the case. This is a smart buy for IHG, I just worry that for Six Senses, it might not be as much so. History is not good on this, often the magic has been squeezed out.”
Bohnenberger said the focus on wellness and sustainability has evolved recently from just being in exotic and far-flung locations to being in urban destinations, too, as demand for them becomes the norm in everyday life.
“It has become increasingly important that our brand evolves and that we bring our commitment to a forward-thinking, environmentally-conscious mentality to urban locations,” Bohnenberger said. “We’ve already opened two successful hotels in Singapore, which celebrate the local culture, vibrant community and spirit of the brand. And next year Six Senses New York premieres. … We will stay true to who we are, but adapt to new locations and changes globally.”
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Headline: IHG buys Six Senses as new niche atop luxury portfolio
Article Date: 2/13/2019
Article Time: 12:00:00 PM