The collapse of tourism It has not been accompanied, as anticipated last summer, by a frenzy of buying and selling hotel assets to weather a scenario of a year without income.
Real estate consultants detect that fewer operations have been closed than expected and those that have done so have been carried out at prices closer to pre-pandemic than post-pandemic levels. “Good assets haven’t come down in price. What we do see is that there is very little visibility in the business and that the prospects for the summer are not very good, so that later the market can be reactivated and there may be discounts there ”, he assures Bruno Halle, co-managing partner of the hotel division of Cushman & Wakefield in Spain.
Each closed hotel room has a monthly cost of 1,000 euros
In your opinion, investors have more liquidity than ever, but they won’t enter until they get discounts close to 30%. “For now they have only achieved reductions of 15% and in very few assets.” Find that paralysis to the cushion that has provided the owners with ERTE and ICO credits, whichThat has allowed them to temporarily paralyze sales and wait a few months to see if business picks up with the arrival of summer. He also emphasizes that the owners anticipate a strong rebound in tourism in the coming years and that is why they are mostly opting for operaciones de sale & lease back, in which the landlords become tenants and also save several possibilities to buy back the asset during the useful life of the contract. This has happened to the businessman Pau Guardans with the sale of the Único hotel in Madrid to a private investorAs a 20-year lease has been secured with various dates for the subsequent repurchase.
Laura Hernando, Director of the Hotels department of Colliers Spain, agrees with Hallé, emphasizing that the coronavirus crisis is not going to bring big discounts. “What is going to happen is that assets that we could never have imagined are put on the market, thereby giving investors the opportunity to negotiate with them.” Another element that, in your opinion, can determine the acceleration of movements in the market it is the closing of the tap by the bank to offer new financing. “There is no new liquidity and there is a constant cash drain so companies have chosen, in the first place, to hibernate or to sell assets.” With an average cost of 1,000 euros per month per closed hotel room, entrepreneurs are also looking for alternative financing at a reasonable cost. “They are large debt funds that lend at a price between 5% or 7%, never in double digits. Their clients are only going to be groups that are solvent, which are the ones that have a place in this type of investment ”.
Riu and Iberostar are the chains with the most hotels to sell in case of need
The greater or lesser weight of the debt may be another element that leads hotels to accelerate the sale of assets. This is what has happened with Selenta, which first sold the Nobu hotel in Barcelona at the end of 2020 for 80 million and then it has put the whole group up for sale for 450 million euros. The group has succumbed to the tourism crisis and is shuffling offers from Blackstone, Goldman Sachs or Lone Star. At the same time, it has put all its assets on the market due to the high liabilities it accumulates, above 250 million euros. Another element that will mark differences between chains when it comes to disposing of assets is the patrimonial position. “There are chains like Riu or Iberostar with many owned hotels that can make selective sales to gain liquidity.”
The chain directed by Luis and Carmen Riu have put three assets up for sale to make cash. They were already on sale before the pandemic, but the coronavirus crisis has accelerated the process. The first is a hotel in Lanzarote with 598 rooms and a price of 100 million euros; the second is a 327-room property in Madeira for 40 million and the third is another in Panama for 120 million.
Debt. The company suffered a double negative impact on its accounts, the concentration of its large assets in Barcelona and the collapse of occupation due to the coronavirus. To this was added a liability of 250 million euros, caused by the reforms undertaken in the last four years, which forced it to quickly divest itself of assets.
Nobu. And the first operation was closed at the beginning of 2021, with the sale of the Nobu hotel to the German fund ASG for 80 million. Selenta bought the Gran Torre de Cataluña hotel in 2018 and launched an ambitious $ 57 million reform to open thanks to the alliance with Nobu, the chain owned by chef Nobu Matsuhisa, actor Robert De Niro and film producer Meir Teper. This 260-room hotel was to be a five-star superior that never opened and the German fund will be in charge of proving the welcome.
Sale. The Mestre family is negotiating the sale of its hotel chain to an international fund for about 450 million euros. The group has succumbed to the crisis in tourism caused by the pandemic and is shuffling offers from Blackstone, Goldman Sachs or Lone Star.