U CITY, a property unit of BTS Group Holdings, has added 24 European hotels to its hospitality business under a Bt12.3-billion acquisition that also includes a hotel-management platform with operations in nine countries.
The transaction was closed on Wednesday after an agreement with the vendors on February 23.
BTS Group Holdings owns 35.64 per cent of U City.
Through its Austrian subsidiary Vienna House Capital, U City assumes 100-per-cent ownership of Vienna International Hotel Management (Vienna House) with a portfolio of 16 upmarket leisure and business hotels and eight hotels from Austrian- and Polish-listed Warimpex Finanz- und Beteiligungs.
U City is financing the transaction with a combination of new loans from financial institutions and existing cash.
This year, U City expects VH Capital to achieve consolidated revenue of about 115 million euros (Bt4.3 billion) and earnings before interest, tax, depreciation and amortisation of about 26 million euros. Earnings growth is expected to average 20 per cent annually over the next four years.
U City chief executive Piyaporn Phanachet said that in addition to the hotel assets, the deal included a management platform that operates the 24 hotels and a further 12 third-party hotels.
The management platform and brands are envisaged as a growth engine for further expansion that is complementary to U City’s hotel properties in Thailand, which include Avani Khon Kaen Hotel and Convention Centre, Anantara Chiang Mai Resort and Spa, and Eastin Grand Sathorn Bangkok.
By having a hotel presence in established and emerging European tourist destinations, including in Germany, Poland, France and the Czech Republic, U City stands to benefit from attractive growth opportunities that are value-accretive to its recurring income portfolio, the company said.
Figures from STR Global for the first four months of 2017 show that European hotels are recording solid year-on-year growth across key metrics. Occupancy rates grew 3 per cent, while the average daily rate increased 2.5 per cent and revenue per available room rose 5.9 per cent.
Daniel Ross, a director of U City, described the deal as a landmark transaction for the company as it expands its portfolio of income-generating assets overseas. Overseas business now contributes most of U City’s projected future revenue, he said.
The company believes that these assets, driven by Vienna House’s management team, will provide a sustained platform for growth and enhanced shareholder return, Ross said.
U City recently acquired a 9,700-square-metre office building in London, at 33 Gracechurch Street, and is under contract to buy a second office building of 2,400sqm at 6-14 Underwood Street.
It will start construction on two mixed-use developments in Thailand this year and next that includes hotel, retail and office space on its sites at Phayathai and Mo Chit.
In the first quarter of this year, the company reported revenue of Bt459.42 million and net profit of Bt31.92 million. At the end of 2016 the company posted revenue Bt1.17 billion and a net loss of Bt314.76 million, according to a filing with the Stock Exchange of Thailand.