The Delano brand has always been known for its hotels in South Beach, Miami. Recently, Accor and SBE announced that they would expand the Delano hotel business to Europe, first opening a hotel on the Emerald Coast of Sardinia, Italy.
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The Delano Hotel in Porto Cervo, Sardinia, Italy is scheduled to open in 2023. This will be the brand's first business in international expansion. After that, the business will go out of Miami and Las Vegas. SBE plans to eventually develop the brand. To Europe, South America, the Middle East and Asia.
SBE’s COO of the Middle East and Europe, Chadi Farhat, stated that it does not simply want to increase the number of Delano hotels, but rather to strategically deploy Delano hotels around the world.
Because the new hotel is a new project, the 68-room Delano Hotel Porto Cervo needed a complete renovation of the existing hotel, including a restaurant, lobby and pool bar, beach club and gym.
The new hotel in Sardinia may be a collaboration between SBE, private equity firm Quianto Capital, and consulting firm Enma Capital. Another partner of SBE is also helping the Delano brand go global. It is Accor.
Accor acquired a 50% stake in SBE at a price of US$319 million in 2018. At that time, the hotel industry believed that this investment provided the impetus for Accor's expansion in North America. Farhat said that Accor is also helping SBE in its global development, accelerating the development of SBE's international business, and promoting its business scope to expand to new markets outside the United States.
SBE is a company that owns brands such as hotels, nightclubs and restaurants. In 2016, it acquired Morgan Hotel for US$82 million, greatly expanding its life hotel portfolio and achieving rapid business development. At that time, it was expected to have more than 50 by 2020. A hotel, and will also vigorously expand the all-round fashion life experience, dining and entertainment fields.
Farhat said that Delano's expansion began in Europe, first with the opening of a hotel in Italy, followed by an announcement of a hotel project in Switzerland. Although Delano always reminds people of the scenery of South Beach, its global business portfolio is expected to expand to the seaside, countryside and ski resorts. Farhat said that the South Returning Beach element that makes Delano unique will also spread globally.
It does not seem to be the best time for the global expansion of the Delano brand, especially to expand into the luxury hotel market. However, SBE and Accor still insist on doing so, and said that compared to other high-end hotel brands, Delano is less affected by the current tourism environment.
Farhat said that Delano is not a traditional luxury or ultra-high-end hotel, it uses hotels to create destinations. He pointed out that Modrian, another brand of SBE and Accor, in Doha, Qatar, proved that tourists have been suppressing demand for luxury accommodation during the epidemic. The performance of Modrian Hotel in July this year was better than that in 2019 because of the popularity of home vacations after the epidemic situation has eased.
The current travel environment may even provide better opportunities to build the Delano brand.
However, the turbulent economic environment has created challenges for financing, especially in the hotel industry. Farhat shares the ideas of Hyatt and InterContinental executives that there are many long-depressed sources of funding in markets outside the hotel industry that can help its business expand. But the cost of this investment method is also high.
InterContinental and Hyatt also chose to expand their business during the epidemic: Hyatt plans to increase its Thompsom hotel brand's property portfolio by nearly 70% in the next three years; InterContinental Hotels Group (IHG) promises to expand the Regent brand to 50% globally Family. Moreover, both hotels intend to raise funds through private equity and hedge funds, and the hotels need to provide higher investment returns.
Farhat also said that there are not only repressed capital in the market, but also other development opportunities. The iconic hotel assets that have been cancelled in New York will provide opportunities for the conversion of new brands. Although the market environment is sluggish, there are opportunities with capital.
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