GLOBAL UPDATE : DEVELOPMENT
Capital for Capella
Stoneleigh Capital takes a minority position to help ramp up expansion of the Capella and Solís brands .
By Jeff Weinstein , editor in chief
On the heels of initial success with his ultra-luxury Capella hotel brand since it launched in 2002 , veteran hotelier Horst Schulze is taking on an equity partner to ramp up expansion . At the same time , Schulze has renamed his company Capella Hotel Group , Atlanta , as he wants to take advantage of what he considers a halo effect the Capella brand has created with owners , developers and guests .
Private equity firm Stoneleigh Capital , Norwalk , Connecticut , is taking a minority stake and three seats on the board of Schulze ’ s company — formerly known as West Paces Hotel Group — which has 14 hotels open ( five Capellas , two Solís hotels and seven shorter-term independent management contracts ). Nine additional Capella and Solís hotels are set to open by 2013 to reach the 16-unit mark for the brands , and Schulze believes this partnership will allow Capella Hotel Group to double the size of the portfolio by the end of 2014 .
Currently , Capella hotels are under construction in Niseko , Japan ; Washington , D . C .; Bangkok ; Sochi , Russia ; and the Riviera Maya in Mexico . There are Solís being completed in Nanjing , China ; Qatar ; Sochi ; and Sunny Isles , Florida .
Stoneleigh will be an active partner with the ability to provide sliver equity , mezzanine loans and , Schulze says , will even consider outright acquisitions in markets that can support one of the two Capella brands . Schulze
is targeting major global gateways and destination markets for expansion and says Stoneleigh is initially putting up US $ 60 million for sliver equity positions in new deals . Schulze says the new team is negotiating to work with a European fund that plans to spend about € 500 million ( US $ 646.6 million ) on hotel development and acquisition .
Schulze is bullish about the potential of his brands , especially Capella , because of the performance to date . He points to the hotel in Singapore as the city / state ’ s rate and occupancy leader and another in Dusseldorf as number two in RevPAR in all of Germany .
“ After taking over the Ritz-Carlton in Bali two years ago and running it as an Ayana everyone questioned what I could do without a brand ,” Schulze says . “ This year ( 2011 ) it will finish with the highest occupancy and its best success in 17 years . As a result , there is an unbelievable flow of interest in us taking over existing hotels and developing new hotels . This is the right time to find a partner who wants to do these types of investments .”
Schulze adds that right now he sees 70 or 80 locations where his company could grow , including areas such as Angkor Wat in Cambodia and Hainan Island in China .
Among Capella ’ s development partners is Castleton Hotel Partners ( CHP ), Washington , D . C ., which is taking a bigger step into the ultra-luxury hotel sector with initial plans to develop three or four Capella hotels .
CHP Founder Bruce Bradley says
“ There is an unbelievable flow of interest in us taking over existing hotels and developing new hotels . This is the right time to find a partner who wants to do these types of investments .”
– Horst Schulze
his private development company — which includes joint venture equity partners Point Ford Management Limited ( PFML ), a Southeast Asian investment firm — has longer-term goals to develop other luxury brands after sourcing the initial deals in key U . S . and European gateways over the next 24 months .
The first hotel from the group , the 49-room Capella Georgetown in Washington , D . C ., which includes another equity partner , ICG Properties , Washington , D . C ., has broken ground and has a projected opening date of December 1 , according to Bradley . “ Right now we are very much focused on Capella Hotels and Resorts ,” Bradley adds . “ We bought into the concept and the brand in a big way , and it is our primary focus .”
18 HOTELS March 2012 www . hotelsmag . com