BERLIN—Redefine|BDL’s growth in the United Kingdom is serving as a springboard to other parts of the world.
Speaking to Hotel News Now during the 18th International Hotel Investment Forum in Berlin earlier this month, the company’s MD Stewart Campbell pointed to Europe and the United States as two regions the company will target.
“Excellent trading in 2014 bodes well for another good year (in 2015). In regional United Kingdom, we saw 6% revenue growth, less in London, but that is not surprising as considering how strong (London) is, the heat must get out of that market. There are records all around, but we have had and would rather see steady growth,” Campbell added.
Because the Glasgow, Scotland-based company favors franchise-only agreements, the U.S. is an obvious playing field, he said, although he declined from stating what that U.S. pipeline might be. Campbell believes Redefine|BDL—divided into management and development wings, with equal emphasis on both going forwards—has the operational muscle to effect such a move.
“With recent deals, if we entered the U.S. market (we) would be in the top 10 of the largest management companies,” Campbell said.
Redefine|BDL manages approximately 70 hotels. The company has 35 properties in its development pipeline, among them a Hilton in Leeds, a Holiday Inn Express in Middlesbrough and an Ibis Styles in Glasgow. Redefine|BDL also has two properties in Africa.
Campbell said he had seen a “massive shift in the last 12 months” in third-party management deals within the hotel industry.
“The U.S. franchise-only model works, as it has been seen that operators who keep one eye on the brand will not concentrate fully on the (profit and loss account),” he said. “We support brand standards but push back to ensure guest value.”
The owner is important to the equation as they need to put in fresh capital, Campbell said.
“Most important is flexibility in the contract, so that owners can help value on the exit,” he said.
The company also is looking to add a portfolio in Europe, where outside of the U.K. it has no presence. Such a move could begin with a small platform.
“One of our (unique selling points) we can offer to owners is that we offer it all,” Campbell said, who added the company prefers to inject its capital share via senior debt, not equity.
UK growth
Campbell also said development is coming back to the U.K. This might be a reaction to all the deals and acquisitions having already happened. The company is taking part in the development conversation, with an upcoming Courtyard by Marriott set to open in 2016 in Edinburgh.
“Brands are happy with good operators who possess all the disciplines,” Campbell said.
He added: “Our future will be about investing in capital expenditure and staff and seeing what to do with returns.”
Redefine|BDL was until May 2013 two separate companies, Redefine Hotels and BDL Management. Redefine|BDL’s publicly listed parent company, Redefine International, went full steam ahead in adding hotel properties in 2010, when it scooped up 11 hotels, five via a portfolio deal with Splendid Hotels.
After the two entities merged, Redefine|BDL’s largest foray was the November 2014 management takeover of 22 InterContinental Hotels Group properties (19 Holiday Inn hotels and three Crowne Plaza properties) that remained owned by LRG Acquisitions Limited and involved 6,000 keys.
Other properties in its portfolio include independents and more than a dozen brands, including Best Western (U.K.), Hilton, Radisson Blu, Ramada Encore and Westin.
Campbell said the only asset Redefine|BDL owns is its office in Glasgow, although Redefine International owns nine hotel properties, as well as retail and office assets.
He added Redefine|BDL is an eclectic array of entities, with the largest stakeholders being Redefine International (with 25.4% of the company) and African hotel group Tsogo Sun (25%), which came on board in May 2014.
“Tsogo Sun is the biggest gaming concern in South Africa, but it is difficult to deploy cash (there). They have to spend cash on a platform,” Campbell said, adding Tsogo Sun’s former MD was current Redefine|BDL CEO Helder Pereira.
“It gives Tsogo Sun a presence in Europe, too,” Campbell added.