Hilton Hotels Sold: Sign of Recovery?​

By Robyn Ma​

The Story

European real estate investment platform Henderson Park has purchased a chain of Hilton hotels in the UK from Tonstate Group for approximately £555 million. By adding Hilton to its portfolio, Henderson Park acquires 12 more hotels and over 2,400 rooms in London, Edinburgh, Bristol, Coventry and Dublin. The deal was financed by private equity group Apollo Global Management (Hotelier and Hospitality).

Henderson plans to invest another £40 million into improving facilities at the Hilton hotels. Founding partner of Henderson Park, Nick Weber, sees, “a massive recovery coming on this and so our bet on the Hilton portfolio is on phenomenal assets” (Financial Times).

Despite the Covid-19 lockdown, the hotel sector has been doing surprisingly well recently. Although the average UK hotel occupancy dropped to 21.9% in April 2020, it had rebounded to 71% by August 2021 (Financial Times). This appears to have been caused by an increased demand for domestic holidays. With easing travel restrictions, Henderson Park’s bet on the recovery of hotels does not seem unfounded.

What it Means for Businesses and Law Firms

During the pandemic, tightened restrictions on international travel and domestic lockdowns led to decreased demand for the hospitality industry. Support by banks and government assistance schemes helped to prop up hotels that were at risk of insolvency.

However, unfazed by the rise of work from home initiatives, real estate companies like Henderson Park see strong value in investing in hotels. Indeed, CEO of Hilton, Chris Nassetta, recently announced that the company had “seen its highest-ever revenue per available room this year”, likely a result of the increased popularity of holidays spent in home countries or 'staycations' (Financial Times).

However, the hotel industry is still facing challenges, including the staffing crisis currently affecting the wider hospitality industry. Industry leaders recently wrote an open letter to the government calling for a revision of settlement and pre-settlement schemes, and the inclusion of highly skilled migrants to the skills shortage list resulting from Brexit. The letter notes that, pre-pandemic, hospitality contributed approximately £133.5 billion to the national gross domestic product (Financial Times).

Firms are responded to this crisis in different ways. The owner of the Hoxton hotel chain has "turned to local job centres for recruitment", whilst the Chief Executive of Marriott has announced that its company is in a “fight for talent” (Financial Times). Clearly, the troubles surrounding the hotel industry have not left. Henderson Park will need to address these challenges moving forward.

Law Firms Involved: Law firms involved in restructuring, corporate, employment, tax and finance teams would be involved in this deal. Solicitors with extensive experience in the hospitality and real estate sectors would also be required to advise on this transaction. While the details of the current advising law firms don't appear to be public, Jones Day has previously advised Henderson Park.