American private equity firm, KSL Capital Partners, has reportedly set a 30-day deadline for offers on its Malmaison and Hotel du Vin portfolio — less than two years after it paid £200m for the chain of 29 hotels.
Acquiring the business in 2013 from the administrator of the collapsed MWB Group, which went into administration in November, 2012, KSL then it planned to invest significantly in all the hotels and expand both brands across the UK and internationally.
Since then it has opened a new Malmaison hotel in Dundee, in September, 2013, and early last year converted an existing property in St. Andrews to a Hotel du Vin. It has also expanded its portfolio with the acquisitions of Wimbledon’s Cannizaro House and the historic Great Scotland Yard in central London.
At the time the sale KSL partner, Richard Weissmann, said: “We look for unique travel and leisure businesses with strong management teams to help support and grow. Malmaison and Hotel du Vin occupy a strong position in the UK market. With an exceedingly loyal following, we believe each brand has tremendous potential for further growth and expansion.”
KSL has now started contacting prospective buyers it thinks might be interested in a worldwide acquisition of this scale. The hospitality specialist is working with advisers at investment bank UBS to find a buyer and says it wants offers lodged by the first week of February.
To revive two of the UK’s biggest boutique hotel chains KSL installed Gary Davis, an experienced industry executive, as their new chief executive. Sales and profits have since grown substantially. Davis has also taken on the additional role of chief executive of the Village Hotels chain, which KSL acquired at the end of last year from the De Vere Group for £485m.
De Vere Group chairman, Andrew Coppel, described the figure achieved by the Village sale as “a reflection of the excellent quality of the brand, which has a strong and viable future and the potential to double its portfolio”. Many analysts now believe, however, that KSL intends to invest in the Village brand, while selling off Malmaison and Hotel Du Vin.
Both the chains, which employ more than 3,000 people between them, were founded in 1994 and are particularly adept at converting well-known local landmarks such as a former castle prison, hospital and sugar refinery, into boutique hotels.
The disposal by KSL after just 22 months is also being seen as the latest example of private equity buying cheap, turning a distressed business around, and then looking for a sharp exit. “Although Malmaison may have risen in perceived value with the markets,” claimed one hospitality expert, “many believe Hotel Du Vin is the tastier target and remains a well-regarded brand.”
