Ft. Lauderdale Airport Hotels|"UK Hotel Sector M&A Boosted By Arab Demand"

Source             :    ft.com
Category        :    Ft. Lauderdale Airport Hotels
By                  :    Duncan Robinson
Posted By     :    Hotels In Fort Lauderdale

Ft. Lauderdale Airport Hotels

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. Demand from Arab sovereign wealth funds has propped up merger and acquisition activity in the UK’s hotel sector this year, as oil money rushed to pick up prime London assets. In total just less than £2bn of deals were completed in the first half of 2013, compared with £500m in the same period last year, according to an analysis by Deloitte. Hotels in London accounted for some of the largest transactions in the sector, while Arab sovereign wealth funds accounted for the bulk of the deals. Constellation Hotels, which is part of a Qatar Holding investment vehicle, snapped up InterContinental Hotels Group’s hotel on Park Lane for £300m. It paid another £100m to the Crown Estate for the building’s freehold. Maryam Mohajer, senior manager in Deloitte’s travel, hospitality and leisure advisory team, said: “The pricing expectations required for London assets can only be met by sovereign wealth funds. It is one of the only gateway cities that has benefited from the downturn.”

Deals outside the capital made up most of the M&A activity over the first half. The Abu Dhabi Investment Authority bought 42 Marriott-operated hotels owned by the Royal Bank of Scotland for £640m in the period, while, in total, regions outside London made up 70 per cent of all deals during the period. The news is the latest sign that the hotel sector is recovering, after it was hit hard during the downturn following the financial crisis. The hotel industry was one of the frothiest sectors during the M&A bubble of the early-2000s, with a number of chains going on debt-fuelled acquisition binges. Since then, the sector has paid down some of the debt taken on, as it attempts to put itself on an even footing.

Ms Mohajer said that the gap between what sellers expected and what buyers bid had narrowed. “There’s more reality on the sellers’ part,” said Ms Mohajer. “Debt was too readily available in 2007, so buyers could do high multiples. That’s all changed, and sellers now know that.” Things in the sector have improved to such an extent that Hilton Worldwide is planning its return to public markets, after Blackstone bought the hotel chain at the peak of the bubble. The deal – worth $27bn in total – was one of the largest private equity buyouts ever.

Source : ft.com/cms/s/0/3c81e6ec-0c0a-11e3-8f77-00144feabdc0.html#axzz2d3mUMb3l