Recent M&A Activity in the European Hospitality Industry: A story of OpCos and PropCos

September 2018 By

Andrew Harrington Partner

AHV Associates LLP

An Introduction

Founded in 2001 by Andrew Harrington and Hanif Virji, AHV Associates LLP (AHV) is an award winning boutique investment bank focused on advising private companies across a range of M&A and advisory assignments

Recent M&A Activity in the European Hospitality Industry: Opcos and Propcos

Executive Summary

There has been a lot of M&A activity in the European hospitality industry during the last 12 months, either by European companies investing globally or by non European companies acquiring or investing in the European market

We have reviewed the deals that have occurred and have identified a few key themes that could underpin activity in the future:

❑  Many hotel groups have chosen to solely focus on the operational side of their business and divest their real estate assets

• The cash proceeds are then reinvested to support expansion plans, or distributed to shareholders

❑  Hotel groups owning real estate assets have been acquired by two acquirers at the same time

• One focusing on the real estate and the other on hotel management

❑  Big hotel groups have focussed on acquiring other operating companies

• The rationale of these deals could either be geographical expansion, penetration in new hospitality sub-markets or vertical

integration, among others

❑  Consolidation has also occurred on a more regional basis, like the one that has taken place recently in the Nordics

• This enables companies to gain scale and scope to support further expansion

❑  Investments in minority stakes have been a way of gaining access to closely held companies not available for outright sale

• The vendor wants to benefit from the investors’ capital and expertise

❑  Real estate owners invest in operating hotel companies which also act as platforms for new real estate acquisitions

• Hotel companies benefit from this type of deals by operating premises that have been owned by their real estate partners.

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