In interviews with Hotel News Now earlier this year, hotel executives were focused on expanding portfolios and chasing more deals.
GLOBAL REPORT—While hotel deals may be put on hold for now due to the pandemic, several hotel and investment companies hit the ground running at the start of 2020 putting growth strategies into place through acquisitions, new brands, scaling up and new leadership.
Before the pandemic hit, some sources said their efforts could help carry them through a looming downturn.
On 6 January, French real estate investment trust Covivio purchased eight assets, totaling 1,115 rooms in key European cities, leased to NH Hotel Group for €573 million ($635.4 million). This portfolio was previously managed under the Dedica Anthology umbrella, owned by Värde Partners.
Dominique Ozanne, deputy CEO of Covivio, told HNN’s Terence Baker in a 9 January article that the low amount of brand proliferation in Italy made the deal attractive.
“There are not a lot of brands there, but NH does have some dominance and a very good track record. We already own 11 hotels that (NH) operates, and we see opportunity for more consolidation,” he said.
In late January, Coral Gables, Florida-based Driftwood Capital made fundamental changes and additions to expand its network of investors and execute more deals through a plan to spend $3 billion by 2025, reports HNN’s Dana Miller in a February article.
Driftwood Capital CEO Carlos Rodriguez Sr. told HNN the company will target development and acquisition deals in the $30-million-$150 million range. They will also issue loans between $3 million and $50 million, he said. However, Driftwood isn’t opposed to taking bigger deals. The company began developing a $250-million, 502-key Westin Resort in Cocoa Beach, Florida.
Rodriguez said in February if a recession were to hit, his team will have a modified power to be able to execute or develop hotels across the country “at good prices.”
At the 2020 HOTCO event, Kempinski Hotels’ new CEO Martin Smura said he plans to expand the luxury portfolio to 100 hotels and add a new co-development brand called 7Pines, writes HNN’s Terence Baker.
The co-development brand, 7Pines, originates from a partnership established in October 2019 with Germany-based owner and developer 12.18. Investment Management, which plans to raise €500 million ($554.6 million) to fund the platform, Smura said.
Atlanta-based Hotel Equities merged with global private equity firm Virtua Partners in February, which Hotel Equities President and CEO Brad Rahinsky said has allowed his company to increase the number of projects it is working on, writes HNN’s Danielle Hess.
Virtua Partners raised more than $341 million in 2019 to be able to invest more than $500 million into Hotel Equities.
Peter Twachtman, CEO of boutique hotel management company Lark Hotels, told HNN’s Bryan Wroten in a March article that he sees a path for the company to turn into something bigger than a “regional powerhouse.” Twachtman assumed the role of CEO on 2 January.
He said his business goal is to thoughtfully grow across the Eastern Seaboard.
“We've had good dialogue in the last eight weeks with investment groups to sort of understand how we grow exponentially through a funding infusion,” he said, adding he could not say more beyond that. “We would certainly love to double in size in a thoughtful way and drive a brand and management company.”
United Properties made its first foray into hotel development with the 37-story RBC Gateway project in Minneapolis, which will include a Four Seasons Hotels and Resorts property, writes HNN’s Stephanie Ricca. As of April, construction on the property was still happening despite the pandemic.
“We’re currently pursuing other opportunities and building a strategy to integrate hotels into mixed-use projects to make them more appealing,” said Scott Peterson, United Properties’ VP of hospitality and office development. “We see hotels providing some incredible amenities to office tenants—everything from state-of-the-art fitness facilities to state-of-the-art meeting rooms.”
Peterson said finding projects, such as the one in Minneapolis, makes him excited about expanding the company’s hotel portfolio, Ricca writes.
He noted that COVID-19 impacts everything, but going back to the fundamentals of developing good assets and looking at opportunities as they arise leaves him hopeful they will “get back to full steam ahead soon.”
Proper Hospitality is adding to its family of brands with the debut of Hotel June in summer 2020, HNN’s Dana Miller writes. The debut was delayed due to COVID-19. Patrick Pahlke, VP of commercial at Proper Hospitality, said Hotel June will be a brand that grows “a lot in the future because it’s easier to grow a mid-tier lifestyle brand.”
The first Hotel June property will be converted from Proper Hospitality’s Custom Hotel in Los Angeles near LAX Airport. Expansion plans for the brand include East Coast presence and eventually in Europe and Asia/Pacific, he said.