Mandarin Oriental Sell Washington DC Hotel To Henderson Park For $139m
Main Photo: The Mandarin Oriental Washington DC with it’s fabulous view over the Southwest Waterfront
Date: August 2022
Name: Mandarin Oriental Washington DC
Location: Maryland Avenue SW, Washington DC, USA
Number of Keys: 373
Seller: Mandarin Oriental, who opened the hotel in 2004
Buyer: London-based Henderson Park
Mandarin Oriental is selling it’s Washington DC hotel to private equity firm Henderson Park for $139 million.
The deal is scheduled to complete on 8 September and Mandarin Oriental will no longer operate the property.
Opened in 2004, the firm spent $144 million to build the 11-storey asset at 1330 Maryland Ave SW, near the US capital’s Southwest Waterfront neighbourhood. With Mandarin Oriental taking it’s name with it upon check out, the property will be under new management, although new owner Henderson Park declined to comment on its plans for the lodging asset.
The Washington location may be deemed as non-core for the brand given the decision to let go of its operations, according to hospitality property investment specialist Corey Hamabata, who serves as managing director at Hong Kong-based investment manager Rockpool Capital and TREC Hospitality Investment.
Hamabata, who was not involved in the transaction, also noted the divestment could help free up cash that can be used in other productive uses like investing in new assets and expanding management contract business.
James Riley, Group CEO, said: “Over the last 18 years Mandarin Oriental has positioned this hotel as a market leader in the city. During this period however, the Group’s portfolio has developed significantly with many new, unique properties across the world that are more in line with our long-term vision for the brand than this asset.
“Today, with our track record in creating market-leading hotels, the Group’s strategy for expansion is focused on growing the management business with brand-defining properties. With strong interest from investors in this property, the time was right to initiate a sales process which has now been successfully concluded.”
“The United States is a key market for Mandarin Oriental. The Group has announced new hotel developments in Boca Raton, Grand Cayman and Honolulu as well as Residence projects in New York and Beverly Hills and further exciting developments are expected in the coming months,” Riley added.
Mandarin Oriental said in its 2021 annual report that the profitability of its US locations recovered last year as leisure travel picked up, but noted that the “performance in Washington DC was more challenging given the hotel’s size and historic reliance on corporate and group demand, which remained weak.”
The average occupancy rate at Mandarin Oriental’s Washington location only improved marginally last year; rising from 25 percent in 2020 to 29.9 percent in 2021. At it’s 148-key Boston hotel, the group’s only other wholly-owned US property, occupancy more than doubled in 2021 compared to the previous year, to average 38.7 percent.
Revenue per available room in Washington improved by 43 percent year on year to $101 in 2021, which lagged behind the 122 percent increase in revenue in Boston, where Mandarin Oriental was able to achieve REVPAR of $255 last year compared to $115 a year earlier.
Average room rates at the Mandarin Oriental Washington recovered by 20 percent year on year in 2021 to reach an average of $339 per night, while rates at the Boston property rose by nine percent to hover around $666 per night over the same period.
Price: US$139m
Price per Key: $373k
THPT Comment: Remarkably good price for Henderson Park, although we’re guessing the hotel will need a thorough refurb. Great location. What brand and managment will Henderson Park go for?
First Seen: Mingtiandi
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