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NH Hotel Group to accelerate growth in Latin America

NH Hotel Group has entered into an agreement for the acquisition of Latin American chain, Hoteles Royal. Under the terms agreed, the Company will first take an 80.77% ownership interest and will later acquire the remaining 19.23%. The amount payable for the acquisition of 100% of the equity of Hoteles Royal, after deducting the €21.5m collected from the sale of NH Bogotá Parque 93, is €65.6m.

As a result, NH is accelerating the growth plans outlined in its five-year business plan, taking advantage of a unique opportunity to achieve a leadership position in various destinations throughout the region. The proceeds from the sale of the NH Bogotá Parque 93 hotel in Colombia in January, coupled with some of the proceeds from the sale of Sotogrande last year, position the Group to fund the Hoteles Royal acquisition without having to increase its debt. The sale of the Bogota hotel was closed at a substantially higher multiple of EBITDA than the Hoteles Royal acquisition, which means that the deal as a whole was completed at a very compelling multiple.  

Hoteles Royal, a homogenous product in line with NH’s high standards
Hoteles Royal is an international company of Colombian origin focused on the development and management of city hotels and is a benchmark player in the corporate segment. The agreement will enable NH to add 20 hotels and 2,257 rooms divided between Colombia (15 hotels), Chile (4 hotels) and Ecuador (1 hotel). These establishments are currently operated by the Latin American company under a mix of regimes: ownership arrangements (3 hotels), long-term variable leases (12 hotels) and management contracts (5 hotels). The mix of contracts used by Royal fits with the asset-light growth model envisaged by NH for the years to come.  

This transaction reinforces NH’s portfolio in the region in attractive locations. The Group will emerge as the leading player in Bogota and one of the leading operators in Santiago de Chile, both of which are destinations in which the Company already does business and had targeted for growth. The Hoteles Royal establishments provide a homogenous and consistent product offering which presents a strong match with the high standards upheld by NH and will facilitate the integration of these new properties into the latter’s hotel portfolio.  

Agreement with Radisson
Until now, Hoteles Royal holds the Radisson franchise in Latin America; in fact, six of the Colombian chain’s hotels, included under the scope of this agreement, are marketed under the Radisson brand. As a result of this acquisition and in the wake of a three-way agreement (between Radisson, Hoteles Royal and NH Hotel Group), Radisson would take back control of its franchise in Latin America and NH Hotel Group would rebrand the acquired hotels as NH Collection and NH Hotels establishments.  

An opportunity to boost the multinational’s growth in Latin America
At present, NH operates more than 8,000 hotel rooms in America between 37 hotels located in nine different countries: Argentina, Chile, Cuba, United States, Haiti, Mexico, Dominican Republic, Uruguay and Venezuela. As a result of the acquisition, NH will have 57 hotels and over 10,000 rooms on the continent, becoming a benchmark player in some of Latin America’s key markets. Moreover, the acquisition will boost the Group’s earnings in the region, where revenue currently accounts for 6% of the total.    

In the words of Federico J. González Tejera, CEO of NH Hotel Group: “This acquisition delivers growth in Latin America, one of the core objectives contemplated in our business plan, without requiring any deviation whatsoever from our stated commitments. We are certain that the process of integrating the Hoteles Royal properties into the NH portfolio will be natural and easy given the product and positioning match. We are confident that the integration will be successfully completed during the course of this year.”

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