MADRID—Spanish hotel firm NH Hotels has both the brands and the know-how to thrive in its major markets throughout Europe and Latin America and has developed sufficient flexibility to avoid the next downturn, according to a company official.
The company also has emerged from several years of discord among its principal stakeholders. That tangle has been eased by the presence of Thailand’s Minor International, which now owns 45% of NH Hotels’ shares.
Speaking at the official opening of the 150-room Nhow Marseille in Marseille, France, Hugo Rovira, managing director of southern Europe and U.S. at NH Hotels, said the company’s footprint extends to more than 30 countries and more than 400 hotels with a strong presence in Europe and South America.
“In 2017, we saw a 6.5% increase in turnover to more than €1.5 billion ($1.75 billion), and we should reach our (earnings before interest, tax, depreciation and amortization) guidance,” Rovira said.
In July, NH Hotels announced its EBITDA guidance was €260 million ($303 million).
Rovira said that a settled ownership will help the firm’s strategic expansion.
In June, Minor bought a 25.2% stake in NH Hotels from Chinese company HNA Group valued at €619 million ($722 million). HNA also owned a large stake in Radisson Hotel Group—which it sold in August—that frustrated activist NH shareholders Oceanwood Capital Management and Hesperia.
“While there are a lot of synergies between Minor and NH Hotels, there is no overlapping of geographies and brands, with the exception of Portugal,” Rovira said.
Minor bought Portuguese chain Tivoli Hotels in February 2016 for €294.2 million ($343.4 million).
Four is more
NH Hotels did not stop its investment and expansion during the HNA years, Rovira said.
“We’ve invested approximately €230 million ($268 million) over the last few years,” he said, adding that the chain’s brands reach for something deeper than merely servicing and cleaning rooms.
“The objective is not to be super-elitist, but we are limited for space, and a quality product comes at a price, otherwise you are not being honest. (Our hotels) provide value, but you need to price it right not to be prohibitive,” Rovira said, referring to the Nhow brand.
NH has four brands: two in the upper-upscale segment in NH Collection and Nhow; and two core brands, NH and Hesperia, which are “midscale plus,” according to Rovira.
“We prefer to call upper upscale ‘premium,’ not ‘luxury,’ which for us would include Four Seasons (Hotels & Resorts) and Mandarin Oriental,” he said.
Rovira said Nhow and NH Collection represent the company’s biggest opportunities.
“Nhow is the one with the strong design element, and each Nhow hotel will have its own identity,” he said. “Berlin will be about music with pink being its dominant color. Marseille is about the sun and the sea, with yellow dominant. Milan (is) orange, while London will be green.”
NH Hotels’ pipeline of Nhow properties includes hotels in Rome; Brussels; Amsterdam; Santiago, Chile; Lima, Peru; and Frankfurt, Germany, Rovira said.
NH Collection was launched less than five years ago and already has more than 70 properties, including a hotel in Marseille located four miles from the Nhow Marseille. The 176-room NH Collection Marseille opened in January 2018 in partnership with investment company Atemi SAS.
In terms of its business model, NH Hotels’ “approach is to be balanced,” Rovira said.
“We own roughly 30% of our hotels, but we also lease and have management contracts. We are not good at franchising as we’re strict on brand standards and do not like to play policeman,” he said.
NH Hotels plans to open Nhow and NH Collection hotels in primary markets instead of secondary ones, Rovira said. The company currently is not interested in other segments, regardless of how trendy they might be.
“Saying yes to one idea is to say no to another,” he said.
Europe expansion
NH Hotels’ growth plans include moving into more markets in Europe and increasing the number of hotels in its primary geographies.
“France is a strategic market for NH, but it is one we’ve neglected,” Rovira said. “That is to change. We have 130 hotels in Spain, but only 12 in France, so, by 2020, we will have 20 hotels in France.”
In addition to the two hotels in Marseille, there is a project in development at the airport in Toulouse to open either at the end of 2019 or beginning of 2020, he added.
“And we must be in Paris, as well as in Lyon and Bordeaux,” he said. “It is an ambitious plan, but my opinion is that while there is not a (hotel industry) gap in good luxury and budget hotels, there is in the middle.
“In France, the (meetings, incentives, conventions and expositions) market is 30% to 35% of revenue, so we are a relevant players as most of our hotels are urban. And it is a good moment for leases now in France, and also in Italy.”
Italy is another strategic market for NH, with more than 50 NH Hotels’ assets there now, while Belgium, the Netherlands and Luxembourg are also strong. In the Netherlands, the upcoming Amsterdam Nhow hotel will have 650 rooms and be the largest in the country, Rovira said.
Home fires
As for NH Hotels’ home market of Spain, there is still room for improvement, Rovira said.
“Our resorts have definitely been helped by the recent news coming out Tunisia and Libya, but Spanish resorts are again facing competition from markets such as Turkey and Tunisia itself,” he said. “Spain has room for quality, not volume, and higher (average daily rate), but quality is not just about five star. Low single-digit growth, not double digits as we have enjoyed.”
Rovira said luxury brands such as Mandarin Oriental now are entering Spain, which will add a welcome level of competition and further boost ADR.
“We’ve done a lot of homework to face the next downturn,” he said. “Having four brands, where just recently we only had the one, gives the company more flexibility, and we have renegotiated all our lease agreements.”
Spanish consumers now have a good perception about branded hotels, and approximately 50% of bookings at NH are now direct, Rovira said.
Another change in the country is that investors now are being very active in the space. Hotel financing is changing, and family-owned interests have gravitated toward management agreements.
NH’s one U.S. hotel, which will open in October 2020 in Manhattan, is owned by the company, Rovira said.
“The 2020 supply numbers (in the U.S.) look better, so we believe we are doing the refurbishment at the right moment,” he added.
Rovira said Latin America is the second market in which NH Hotels is strong, noting the company recently bought (Colombian) hotels group Hoteles Royal for €65.6 million ($76.5 million).
Editor’s note: NH Hotels paid for all travel expenses to Marseille, including airfare, amenities and hotel accommodations. Complete editorial control was at the discretion of the Hotel News Now editorial team; NH Hotels had no influence over the coverage provided.