IHG has bought 51% of Taiwan-based brand Regent Hotels & Resorts with the option of purchasing the remaining share and intends to accelerate the brand’s growth.
Editor's note: This story has been updated to include a statement from IHG.
DENHAM, England—InterContinental Hotels Group has bought a majority stake in a brand that will sit at the very top of its brand portfolio.
IHG announced Wednesday an agreement to purchase a 51% stake in six-asset Regent Hotels & Resorts for $39 million in cash in three tranches, the last due in 2024, with the option of acquiring the remaining shares in what the accompanying news release states will be in a “phased manner from 2026.”
The price of the brand in full would be based on a trailing 12-month multiple of joint-venture income, which according to current projections would be less than $100 million, IHG said in the release.
Speaking on a CEO panel in March at the International Hotel Investment Forum, IHG’s CEO Keith Barr announced the company was in the process of purchasing a luxury portfolio that would be positioned as its top brand.
At the time, Barr did not disclose the identity of the brand being acquired.
The release issued Wednesday also stated IHG has formed a new division to look enhance its luxury portfolio, which was formerly led by the company’s InterContinental Hotels & Resorts brand. As part of this initiative and the Regent deal, the company will convert the InterContinental Hong Kong into a Regent property in early 2021 and plans to grow the Regent brand to more than 10,000 rooms in 40 hotels.
In the news release, Barr said he saw the opportunity in the deal of unlocking Regent’s “enormous potential” and growing the brand globally.
IHG is acquiring the 51% stake from Formosa International Hotels Corporation, which retains 49% of the hotel chain and also owns brands Just Sleep and Silks, which includes sub-brands Silk Place, Silks Club, Wellspring by Silks and Just Sleep.
FIHC stated in the release that the deal will help both companies accelerate Regent’s international expansion, and IHG will have to rights to develop and manage all new Regent Hotels outside of Taiwan. The management of the existing flagship Regent Taipei in Taiwan remains with FIHC.
An IHG spokesperson provided a statement to Hotel News Now explaining how the company sees the new acquisition in terms of its overall portfolio.
“Regent Hotels & Resorts will sit within the upper luxury segment at a clear price point above our InterContinental brand. The Regent brand has tremendous heritage and will help us to capitalise on the clear growth opportunity we’ve identified in the luxury market,” the statement said.
IHG also sees having a more comprehensive luxury offering as a further strengthening of its owner proposition.
“(It gives) us the ability to deepen relationships with those who want to differentiate and expand their portfolio with us. It will also have numerous ‘halo’ benefits, including helping to strengthen our loyalty offer,” according to the spokesperson.
Ellen Chang, Regent’s group executive director of marketing, said the brand currently has assets in Berlin, Montenegro, Beijing, Singapore and Chongqing, China, but its portfolio is expected to grow now with IHG on board.
“By holding controlling shares, IHG will be in dominant position to develop and manage all existing and new Regent hotels outside of Taiwan, whilst FIHC shall retain exclusive rights to develop and manage future developments under the Regent brand in Taiwan, including the management of the Regent Taipei Hotel,” Chang said.
Chang sees the deal as a win-win for the two companies.
“Through this alliance, all current Regent properties will join IHG’s global online reservation system and loyalty program, while IHG can quickly pick up the local management know-how from the Regent teams, accelerating the growth of both sales and profits,” Chang said.
One asset, in Singapore, is managed by Four Seasons Hotels & Resorts, which at one time owned the entire portfolio.
Four Seasons is due to end that management role soon, according to Daniel Voellm, managing partner, Hong Kong, at HVS.
Voellm said the deal is about having bigger muscle.
“IHG has a plan to integrate (Regent) into its portfolio and roll it out in a bigger fashion,” he said.
Voellm added this is yet one more deal in long line of hotel industry consolidation, although for IHG it’s far more important in terms of its segment spread.
“Luxury is pretty much covered, so IHG needed to bolster its high-end brand repertoire. This is a strategic angle,” he said. “Regent has gone through a number of owners, but IHG needed to be more competitive in the luxury space, and with a luxury brand with strong roots.”
FIHC acquired Regent from Carlson Hotels, as of last week operating as the Radisson Hotel Group, and its part-owned European master franchisor Carlson Rezidor, now Rezidor Hotel Group AB, in 2010 for an undisclosed price.
Regent has had an interesting journey.
Robert H. Burns, along with Adrian Zecha, famed for Amanresorts, and Georg Rafael, founded what was then Regent International Hotels in 1970.
Burns sold his interest and the firm to Four Seasons Hotels & Resorts in 1992 for $122 million, a deal which included a 25% leasehold of the then Regent Hotel, now the InterContinental Hong Kong. The Regent portfolio for this sale numbered 15 assets in operation and pipeline.
Four Seasons sold it to Carlson in 1997.
Formosa re-appointed Burns as honorary chairman of Regent when it bought the flag from Carlson for $50 million, outbidding several other companies, including IHG, according to the Financial Times.
FIHC’s Chang said Silks, which has four properties, is a “5-star, lifestyle hotel brand incorporating local culture and natural surroundings into its design elements.”
Chang added FIHC also is looking to develop overseas properties for the Silk brand.