The Rich are out Shopping for Trophy Hotel Assets and Brands
The 248-room Mandarin Oriental New York, located 250ft above Columbus Circle, offers commanding views of Manhattan, Central Park (pictured) and Hudson River. Photo courtesy of Mandarin Oriental Hotel Group
January 10, 2022
Asia’s richest man, Mukesh Ambani, is the latest tycoon to show that appetite for luxury hotels among the billionaire set is strong and the rich are on the hunt for good buys and in it for the longterm.
Ambani’s Reliance Industries, through wholly-owned Reliance Industry Investments and Holdings, is buying a 73 percent stake in Mandarin Oriental New York for $98 million, Reliance said in a filing on January 8.
The agreement is with Columbus Centre Corporation, the indirect owner of the 73 percent stake. The Investment Corporation of Dubai, which lists the hotel as part of its portfolio on its website, is believed to own the Cayman Islands-incorporated entity.
Reliance said it is prepared to acquire the remaining 27 percent stake based on the same valuation should the other owners of the hotel – believed to be chiefly Mandarin Oriental Hotel Group – wish to join in the sale.
In any event, by end-March when the deal is completed, Reliance will be the majority owner of a landmark hotel in New York, a city of competing land use and is one of the most difficult hotel markets to enter.
The 248-room hotel, located 250ft above Columbus Circle, offers commanding views of Manhattan, Central Park and Hudson River. It opened in 2003.
“The deal works out to $485,000 per room – sounds too cheap to me. Either it’s totally rundown, or the deal includes taking over debt,” said a source.
An article in The Economic Times, India speculates that Reliance will also take over the hotel debt in excess of $115 million.
The hotel suffered a massive drop in revenue to $15 million in 2020 due to the pandemic, from $113 million in 2019 and $115 million in 2018, Reliance’s filing shows. It closed its doors towards the end of March 2020 and reopened in April 2021.
Reliance said in its filing that the acquisition “will add to the consumer and hospitality footprint of the group”.
The conglomerate is diversifying its main business comprising energy, petrochemicals and natural gas. The New York hotel deal follows investments in Stoke Park in the UK, an owner-operator of a hotel and sports/leisure facilities in Buckinghamshire.
Reliance also has a stake in EIH, the flagship company of The Oberoi Group, India. It is developing a convention centre, hotel and residences in Mumbai.
Ambani isn’t the only billionaire that is confident of the luxury sector’s future growth.
Bill Gates is cementing his control of Four Seasons Hotels & Resorts, a deal announced in September 2021 and is expected to close this month.
For more than a decade, Gates has shared ownership of the Four Seasons with Saudi Prince Alwaleed bin Talal, who collaborated with Gates in 2007 on a deal to take the hotel chain private for $3.4 billion. Now Gates is increasing his holding in Four Seasons to 71 percent, by buying half of Prince Alwaleed’s 47.5 percent stake for $2.21 billion.
The transaction, through Gates’ investment vehicle Cascade, values the hotel chain at $10 billion, including debt.
Four Seasons’ founder Isadore Sharp will keep his 5 percent stake.