PiPeline : EuropE
Nadler Hotels trims tHe fat
The Nadler Soho in London is taking on luxury players in the United Kingdom .
Lifestyle is hot . The concept of getting cool , design-driven rooms at 3- and 4-star price points stands out as one of the biggest trends in Europe and worldwide . However , there ’ s one niche within that niche that hasn ’ t been filled — a boutique hotel that ’ s out to sell against a 5-star experience . Enter Nadler Hotels .
CEO Robert Nadler ’ s vision of a lifestyle hotel trims all the fat — bar , restaurant , gym — off the property to focus on delivering what he thinks guests want . And since the company dove headfirst into the challenging London real estate market in 2006 with the opening of The Nadler Kensington , he ’ s been proving homegrown flags can compete .
Backing from Sir John Mactaggart ’ s Western Heritable Investment Co . Ltd . ( of which Nadler is a director ) gave him the capital to keep swimming upstream with The Nadler Liverpool in 2010 and The Nadler Soho in 2013 , and a fourth property is slated to open in 2015 near Buckingham Palace .
“ We need to be in 24 / 7 cities that already have a mature luxury market — it helps to have something to compare our value proposition against ,” Nadler says . Consequently , most of the one or two properties a year he ’ s looking to open will still be in the U . K . capital .
That means crafting a product that can be adapted to the challenges of non-standard conversion spaces . “ We have different room sizes so we can fit like a Lego into the shape you ’ ve got ,” Nadler says .
In the medium term , Nadler also sees potential in the provinces , and once the chain reaches what he sees as critical mass — a dozen in the portfolio — he ’ d like to consider the United States .
Until then , he ’ s aware the company will have to overdeliver to get investor attention . “ We face higher hurdle rates than a big name ,” Nadler adds . “ We have to take a lower percentage until the investors see a return .”
Conrad Hotels & Resorts property in London . However , Patrick Fitzgibbon , senior vice president , development , Europe and Africa , Hilton Worldwide , cites Central and Eastern Europe as one of the next must-have targets .
Lisbon and Dublin are heating up , and Greece is coming back on the radar . Investor confidence is returning to places like Spain and Portugal , although any buyer expecting a fire-sale price will have to think twice . “ Spanish owners have seen the movie in that respect , and they know that it ’ s worth holding out unless there are demands from a bank ,” van Marken says .
Niche markets in the region might just be the hottest plays . “ Turning around old-fashioned resorts is one of the emerging market trends we foresee will grow in the Mediterranean region ,” says Ivar Yuste , partner , PHG Hotels & Resorts , Madrid .
Along with the “ where ” of deals , the “ what ” is also changing . Smit speaks for a lot of industry insiders when he says the luxury sector is generally played out . “ Rosewood ’ s entry in London , the difficulties Dorchester faces with the gay-rights movements and new development in the U . K . will put financial pressure on the old ( er ) established hotels to refurbish , reposition and start product differentiation ,” he says . “ The Jumeirah and Waldorf brand entries in Germany and Peninsula , Rosewood and Dorchester in France will see the same pressures as those in the U . K . and Germany .”
The real action will be to fill in the upscale , mid-market and even budget segments . Plus , many industry experts say the buzz around 4-star lifestyle and niche offerings is loudest . That ’ s making names like London-based The Nadler Hotels , Ace Hotels , Standard Hotels , Qbic Hotels , CitizenM and Mama Shelter stand out .
Deals depend on POV When it comes to mergers and acquisitions in Europe right now , there is no one-size-fits-all descriptor . Van Marken ’ s take is that most portfolio deals have already come to market .
For the first half of 2014 , 60 % of deals have been single-asset deals , with 40 % coming from portfolio deals . In the first half of 2013 , the split was almost 50 / 50 . In 2013 , many portfolio deals were driven by administrator sales , “ which have mostly been dealt with now ,” says Christoph Härle , CEO , EMEA , JLL Hotels & Hospitality , Munich , Germany .
However , with so few portfolios likely to come to market , investors feel there is no automatic pass . “ There is a lot of equity chasing these types of deals right now , and people are paying a portfolio premium ,” says Marc Socker , senior director , hotel fund management , Invesco Real Estate , London .
Smit agrees that for cashed-up players like Blackstone , grabbing at portfolio deals is worth it .
When it comes to single assets , though , landmark properties remain the most sought-after plays , according to Charles
46 HOTELS October2014 www . hotelsmag . com