News for the Hospitality Executive
The Historic 267-room Le Méridien Piccadilly, London
to be Sold Subject
to a Management Agreement with Starwood and Will Continue
to Operate as a Le Méridien
31 October 2008 - Acting on behalf of Starman, specialist real estate broker, Molinaro Koger, is selling the historic Grade II listed 267-room Le Méridien Piccadilly, London. The property will be sold subject to a management agreement with Starwood Hotels & Resorts and will continue to operate as a Le Méridien hotel.
“Despite the financial uncertainty, there is a great deal of interest in this property, which is in a particularly coveted location,” says Eric Kudlak, managing director Europe, Molinaro Koger.
“While perceived as one of the world’s leading destinations, London presents investors with extremely high barriers to entry. Lack of potential development land limits the opportunity to enter the central London market and conversion opportunities are rare and usually demand major capital improvements.“
Recent operating statistics at Le Méridien indicate an occupancy level above 87 per cent, with an ADR in excess of £213, resulting in a RevPAR of above £187. In 2007, the hotel had a strong year, generating £18 million in room revenues and more than £23.7 million in total revenues, with an NOI of £5.1 million.
While the property is positioned above its competitive set in room rate, there is potential to achieve a significant boost following a proposed room renovation. Other potential opportunities include a large and under-utilised meeting room overlooking Piccadilly on the first floor that could be converted to guest rooms; plans to construct an additional 15 premium rate guest rooms, also with views over Piccadilly; and a 220m2 vacant area in the sub-basement that would be ideal for extra meeting space or a theatre.
The hotel is being sold with a leasehold. It has a restaurant and two bars, two lounges, a beauty salon, spa with indoor swimming pool, fitness centre and a steam room. It also has 1,247m2 of meeting space. Located in the heart of London’s West End, it is adjacent to the theatre district, Piccadilly and Oxford Street and is within easy-reach of the City.
According to Starman, the hotel’s competitive set includes the Sofitel St. James, Athenaeum Hotel, The Langham, The Sheraton Park Lane, the Cavendish and the Grosvenor House. The proposed investment will enable Le Méridien to increase rate and maintain occupancy, which currently runs at a 119 per cent penetration level. Rate penetration hovers at 103 per cent, which is expected to increase after the renovation.
In 2007 London attracted some 25.6 million overnight visitors, contributing £16.6 billion to estimated total tourism spend. The US accounted for 13 per cent of the market, Germany 8 per cent, Australia and France each 7 per cent.
MK was founded in 1959 to provide specialist hotel real estate advisory services to the industry. Working exclusively in the hotel sector, the company is one of the top three hotel real estate companies in the world, with 11 offices in the USA, Beijing, London, Shanghai and Mumbai. Recent European assignments by the London office include the Great Eastern Hotel, London; Marriot Hotels in Prague, Budapest and Copenhagen; and Forte Village Resort in Sardinia, plus various properties in the UK, France, Portugal and Poland.
|Also See:||Starwood Hotels Signs Deals to Operate Two W Hotels in the UK, 160 room W in Manchester and a 194 room W in London / September 2008|
|London: The Savoy - 'Mr Ritz, Mr Escoffier; You Have Been Dismissed!' / Andreas Augustin / November 2006|