Unrelenting: that was the word used by one industry broker earlier this year in describing hotel activity in 2007. Indeed, over the past year several huge mergers and acquisitions have made headlines. First there was the Blackstone Group’s acquisition of Hilton Hotels, a deal valued at US$26 billion. It was followed by news that CHIP REIT was sold for $1.2 billion, which itself came on the heels of the news that Legacy REIT was being acquired by Quebec’s Caisse de dépôt (Editor’s note: at press time Legacy Hotels was being reorganized as part of the Westmont and Innvest portfolio and will no longer exist). And of course, the year started off with headline-grabbing news that luxury hotel operator Four Seasons had agreed to a US$3.37 billion takeover offer from a group that included Bill Gates’ Cascade Investment LLC and Saudi Prince Alwaleed bin Talal.
Certainly, no one can accuse the hotel business of being boring. Incredibly, a total of 141 hotels exchanged hands in 2006, up 73 per cent from 2005. By mid-2007, Colliers International Hotels reported hotel transaction sales in Canada hit $840 million, up 86 per cent from a year earlier. And with the end of the year still a few months away, it will be interesting to see how high the numbers can go.
Recent changes to REITs and their taxability have fuelled much of this year’s frenetic activity. Clearly, the new requirements REITs must meet to qualify for exemption from the proposed taxation of trusts (to take place by 2011) are having an impact. But regardless of what’s fuelling activity, the volume and scope of daily transactions and the constantly evolving hotel landscape is precisely the reason why everyone needs a copy of Hotelier’s Who Owns What? poster and Market Almanac at the ready.
It’s hard to fathom a decade has flown by since we launched this reference tool in response to the heady pace of mergers and acquisitions of the late 1990s. Since that time the hotel industry has gone through various reformulations, with ownership structures becoming more complex at every turn. Thankfully, guests care little about the convoluted partnerships that permeate this industry, but for the rest of us, each twist and turn gets charted with detailed precision.
However, as is always the case, by the time this issue is published there will be other mergers and acquisitions making news throughout the hotel industry. And you’ll continue to read about these dynamic happenings in Hotelier and through regular updates on our website. As the onset of the digital age has taught us, information is quickly becoming today’s gold standard. And information is what we’re all about.