NH and Meliá prepare divestments worth €400M to bypass the crisis

NH and Meliá prepare divestments worth €400M to bypass the crisis

NH and Meliá, second and third largest chains in Spain by volume of supply, are preparing sales worth 400 million euro, according to La Información. This amount would provide them the liquidity needed to circumvent the crisis. Up to 90 establishments from both chains are susceptible to be sold.

NH will prioritise sales in Europe, where most of the establishments it owns are located (51 in Europe against 22 in America) and which have been more impacted by the crisis. The company’s latest results showed: 142 million euro in losses up until March, double digits drop in revenues and an urgent capital increase for more than 100 million euro to preserve the company’s liquidity.

The company, whose main shareholder is Thai company Minor, has already sold some assets before the pandemic. In January 2020, it sold eight luxury hotels (1.115 rooms) in Europe to French real estate management company Covivio and fund Värde. The divestment, which was concluded for between 500 and 600 million euro was the last one before the arrival of the pandemic, according to sector’s sources.

Meliá’s situation is different. Although maintaining part of its portfolio in Europe, with almost half of its hotels located in Spain, the company, whose vice-president and executive director is Gabriel Escarrer only wanted to detail its goal for these operations: to gather between 150 and 200 million euro, as explained by the chain’s real estate director, Mark Hoddinott.

On the timing to carry out these operations, the hotel company did not provide any deadlines or schedules. The nature of these hotels and whether the company will focus on one of its different brands, was also not disclosed, but market sources pointed out that it will focus more on its urban establishments than on its holiday ones.

If both companies coincide in one thing, it is in the type of operation: sale & leaseback, that is, selling its assets but continue using them as a tenant. This formula is used by hotel companies when in need of liquidity, as was demonstrated during the 2008 crisis. Nevertheless, the sources consulted pointed out another method known as lease & management – where it is the owner of the asset who bequeaths its management and pays a franchise for the sales obtained – as a more remote alternative.

Iberian Property logoIberinmo logo
Iberian Property is the best platform for investment in Spain & Portugal. Created for those who seek reliable information about players and deals happening in Iberia. Through updated database, reports, market indicators and daily news, we report “Who’s Who” in Iberian Real Estate!. Iberian Property is also proud to organize the most important international real estate investors’ meeting in Iberia - Portugal Real Estate Summit!