Topland sells Hallmark Hotels in the UK

Main Photo: The Welcombe Hotel, Stratford-upon-Avon

Date: February 2019

Location: 26 hotels/locations across the UK, from Aberdeen to Bournemouth

Name: Various, including what was Menzies Hotels, Feathers Hotels,

No. of Keys: 2,400 approx.

Seller: Topland, a property company headed up by Sol Zakay, with Lionel Benjamin as his hotel chief. This still leaves Topland with 11 hotels such as the Royal Crescent Bath and other hotels trading under the Hilton and Thistle brands.

Buyer: An Israeli investment fund working with LGH Hotels Management, an operating company that runs a portfolio of Holiday Inn and Crowne Plaza franchises in the UK.

Confirming the sale, Topland said that it was “looking to expand the current portfolio of Hilton and Thistle Hotels” and that it was “actively looking for new opportunities on individual or portfolio hotel acquisitions, hotel development, hotel financing and hotel [joint ventures]”.

Topland launched the Hallmark brand in 2015, announcing plans to invest “millions” in the portfolio, including a refurbishment of bedrooms as it continued to pursue growth in the UK ahead of a possible floatation, with a target of GBP1bn.

The same year also saw Topland buy the eight-strong Feathers Group, for a reported GBP65m, taking the company to a total spend of GBP200m within 13 months acquiring 28 hotels.

Prior to Topland’s purchase of Hallmark Hotels in 2014, the chain had undergone a GBP16m refurbishment under the ownership of Bridgepoint, the private equity company which bought the eight-strong group in 2007.

HA Perspective [by Katherine Doggrell]: So no flotation for Topland – and, given the state of the market at the moment, so great shock there – but an indication, along with the recent Proark Accor deal, that investors continue to see some opportunity in the UK.

For Topland, it is now setting its sights on Hiltons and Thistles, while AccorHotels too is looking for a little shuffle up, as the soon-to-be Mercures undergo a spit and polish.

The battle cry issued in recent weeks by Whitbread – and EasyHotel – has been that, cometh the downturn, cometh the picking off low-hanging fruit, with independents first in the firing line.

The cheaper end of the market is facing competition from new entrants such as – gradually – Whitbread’s Zip, but also from the likes of Airbnb, which, according to those close to Hotel Analyst, is likely to see its platform swell under any economic tightening, as spare rooms are rented out to pay mortgages.

And as supply grows, rates will fall. Not such an issue for those who have the spare room easily to hand, but for hotels looking to compete. AccorHotels and its rivals are likely to see a flight to the brands. Owners such as Topland are making their choices now.

Price: £250m

Price per Key: Around £104,166

THPT Comment: Not a bad deal all-round bearing in mind five/six years of decent EBITDA taken out, and if it’s part of a greater strategy…

First Seen: Hotel Analyst

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