HOTEl operator Malmaison has pledged to invest up to £10 million in its properties, including projects in Dundee and St Andrews, after it was acquired by an American venture capital firm for an estimated £180m.
KSL Capital Partners, based in Colorado, will invest in the 27-strong Malmaison and Hotel du Vin chains and will “continue its brand development plans including an extensive renovation programme and expansion within the UK, European and international markets”.
It is understood that the proceeds of the sale will pay down the £187m of debt secured against the group’s properties held by Lloyds Banking Group and Royal Bank of Scotland.
MWB Group Holdings, the hotels’ parent company, called in administrators from Deloitte in November after a row over inter-company loans backed by warring investors, which meant the firm couldn’t meet its liabilities. Another part of the business, MBW Business Exchange, was sold to serviced office group Regus for £40m in February.
KSL, a hotels and leisure specialist, recently snapped up the Belfrey for £65m. The former Ryder Cup venue had previously been owned by bankrupt Irish property tycoon Sean Quinn. In North America, KSL owns a range of hotels, golf clubs, ski resorts and health clubs.
Gary Davis, who became chief executive of the Malmaison and Hotel du Vin group last year, will stay in his role. He said KSL “recognised the significant potential in our business”.
Davis added that the deal meant the company would go ahead with a £3m plan to convert the St Andrews Golf Hotel into a Hotel du Vin. He said: “We will close the hotel in St Andrews on 1 November to undertake a refurbishment and expansion. It is a great property but it needs a lot of work on it.”
In addition to the hotel it is currently developing in Dundee, Davis said the company wanted to establish a Hotel du Vin in Aberdeen and confirmed it was also looking at Inverness.
“In Aberdeen we are desperately looking for a Hotel du Vin,” he said. “The Malmaison does very well there. We would love to find a small existing hotel or a property we could convert.”
The sale comes during a series of “bumper” deals that sector specialists expect will continue for several months.
US-based Starwood Capital acquired Lloyds-backed Principal Hayley for a reported £360m last month, while the Abu Dhabi Investment Authority is thought to be in talks to close a £640m deal to buy 42 RBS-controlled Marriott hotels from administrators at Ernst & Young.
MWB was set up by Richard Balfour-Lynn in 1994 as a serviced office and property investment company. It listed in 1997 and acquired an 82 per cent stake in Malmaison in 2001.
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.
“With an exceedingly-loyal following, we believe each brand has tremendous potential for further growth and expansion. We are pleased to be working with the company’s talented management team.”