Hilton to expand LXR brand, partners with M&C in London
 
Hilton to expand LXR brand, partners with M&C in London
10 JANUARY 2019 9:50 AM

LXR as a brand name has had two distinct guises, but its latest, launched last year, sees Hilton quietly piecing together a collection of luxury, exclusivity and prestige. One LXR hotel open in Dubai will soon be joined by a London managed-and-franchised asset that is owned by Millennium & Copthorne.

LONDON—Hilton executives are actively in talks with hoteliers around the world to expand its brand LXR Hotels & Resorts, with its latest announcement on 9 January being a debut in Europe with the 308-key The Biltmore, Mayfair, in London that is a partnership with Millennium & Copthorne Hotels.

Following a year-long, £50 million ($63.78 million) renovation, The Biltmore, Mayfair, will open in the spring. M&C is the owner, while Hilton will manage the hotel under a managed-and-franchised agreement, the two parties announced.

A news release from M&C stated that the “10-year agreement with Hilton will see Hilton manage The Biltmore, Mayfair, as part of its LXR Hotels & Resorts luxury hotel collection. After five years, M&C has the option to manage the hotel under Hilton’s LXR brand.”

It will be the second LXR hotel, the first being Dubai, although M&C does not have anything to do with that property.

For M&C, the London endeavor is the continuation of a partnership with Hilton that extends to the Millennium Hilton New York One UN Plaza, Millennium Hilton New York Downtown and Millennium Seoul Hilton.

Hilton is prioritizing growing LXR, but the bar for the brand will be set particularly high.

“In Europe, the concentration of independent hotels presents considerable opportunities for LXR. Whilst the stringent criteria for future LXR (assets) ultimately results in a much smaller pool of properties that are eligible for consideration, with limited availability comes a certain level of exclusivity and prestige that Hilton is proud to provide,” said Patrick Fitzgibbon, SVP of development, Europe, Middle East and Africa, at Hilton.

“We are in active discussion with owners around the world, and look forward to announcing new additions to the collection in due course,” he said.

Kwek Leng Beng,
Millennium &
Copthorne Hotels

Kwek Leng Beng, chairman of Millennium & Copthorne Hotels, said the three most important aspects of the deal are access to quality operations, technological muscle and a move into what he termed the “deluxe luxury segment.”

“It’s important to note that the industry worldwide faces a shortage of management expertise—good GMs, front desk managers—and this is a challenge for owners and operators. … The rapid growth in the number of hotels, especially in Asia-Pacific, is among the factors that has contributed to the shortage of talent,” Kwek said.

“We are not a big chain compared to giants like Hilton, but we operate with an entrepreneurial bent. … We have 5-star properties but don’t operate in the deluxe luxury segment. … Hilton has scale to put in and continuously upgrade investments in the technological infrastructure; it has decades of operating experience, so for us it was a good opportunity.”

History
The one LXR property in operation is the 234-room Al Habtoor Palace in Dubai, which is managed by Hilton and owned by the Al Habtoor Group.

Hilton launched the LXR brand with that opening. The asset formerly was a St. Regis Hotels & Resorts property under the Marriott International umbrella.

Fitzgibbon underlined that LXR is a completely separate entity from LXR Luxury Resorts, a brand launched by U.S. private equity fund Blackstone in 2005 and no longer in use.

He described Hilton’s LXR as a “collection of independent hotels that will be distinguished by an unrivaled commitment to personalized attention and luxurious, yet locally immersive, experiences.”

“The (approximately 20) properties that were formerly a part of LXR Luxury Resorts have since become affiliated with other brands or have remained independent,” Fitzgibbon said, referring to the period of time when Blackstone bought Hilton, the actual deal being in 2007.

That LXR brand Blackstone originally launched in 2005 when it was the owner of Wyndham Hotels & Resorts.

Blackstone sold its stake Hilton in May 2018.

The Al Habtoor was rebranded under Hilton’s LXR flag in August 2018.

Opportunity
Kwek said the London venture has some differences to those other assets.

“We closed down the entire hotel, something we have not done before in earlier renovations of our other hotels. Of course there was loss in revenue; we lost ground. We needed to catch up. We saw an opportunity with Hilton’s new luxury brand, and we would be the first in Europe to have this brand,” he said.

“We know (Hilton) well, so it was natural to take up the opportunity.”

The fact that this project is the meeting of two publicly listed companies adds strength to the venture, both sides said. M&C is listed on the London Stock Exchange, while Hilton is listed on the New York Stock Exchange.

M&C’s parent company is the Hong Leong Group based in Singapore.

Patrick Fitzgibbon, Hilton

“We manage hotels for different owners and investors, and this agreement is in line with our growth strategy,” Fitzgibbon said.

The “manachised” agreement will work well, Kwek said.

“This partnership allows us to tap into Hilton’s expertise of managing luxury hotels and their systems, while being involved in the running of the hotel. Hilton, on the other hand, has a beautifully renovated hotel to launch its luxury LXR brand in Europe,” he said.

“The (manage-and-franchise agreement) for our London property will not be adopted globally … used only in selected properties,” he added.

“A self-managed hotel is the best option, but it has some disadvantages. In Mayfair, the push to make up for lost time, for loss in revenue, were important factors, too, in rebranding (the) Mayfair.”

Fitzgibbon said he sees in London natural synergies that will aid the LXR brand.

He also is excited about The Biltmore, Mayfair’s location on Grosvenor Square, on the same square as the former U.S. embassy, which is due to become an asset of Rosewood Hotels & Resorts, another luxury hotel company based in Asia.

“We are growing rapidly, and would always look at additional opportunities on a case-by-case basis, but this is a standalone deal, and we have no plans for further properties to convert at this stage,” Fitzgibbon added.

Kwek said there are no plans for a continuation of the partnership with Hilton for the LXR brand, but added “objectively there can be more such hotels in key gateway cities.”

Fitzgibbon said “the partnership on this project is in line with the existing hotels we operate for Millennium & Copthorne.”

“Whilst it’s a partnership that we’re pleased to be extending, Hilton works with a large number of different ownership structures, (and we) feel very comfortable working within a model that best suits the individual project,” he said.

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