The Rezidor Hotel Group announced an agreement to exit from seven lease agreements in France by the end of the year. The hotels comprise a total of nearly 700 rooms and are mainly operated under the Park Inn by Radisson brand. They are located in secondary locations and have reportedly proven "consistently unprofitable" for Rezidor.
To exit from the leases, Rezidor agreed to a payment to the owner, Hibernia France, of MEUR 11.5 in 2012. The exits will positively affect Rezidor’s EBITDA by approximately MEUR 2 annually. In addition, Rezidor will hand over responsibility for future capital expenditures.
The seven hotels will remain under their existing brands and will be operated by Rezidor for the next few years under management agreements. Should Hibernia France sell the properties, the management agreements will be terminated thereafter. The decision to exit these hotels was made after determining that the hotels’ financial situations were unlikely to turnaround and their positioning and locations are not commensurate with the future direction of the brands.
Rezidor remains committed to the French market and continues to operate two other Park Inn properties in France (in Paris and Nice), have a third hotel opening in Lille in Q4 2012, and will add other strategic locations in the coming years. The company’s other core brand, Radisson Blu with 16 hotels, is the largest upscale brand in France in terms of number of hotels.
“This very important asset management deal is in line with our Route 2015 goal to lift Rezidor’s EBITDA margin by 6-8 percentage points by 2015. It is of fundamental importance to the group to further optimise our portfolio of leased hotels, secure more profitable income streams in the years ahead, and reduce the leverage of the company”, says Knut Kleiven, Deputy President and CFO at Rezidor.
The affected hotels are:
- Park Inn by Radisson Arcachon
- Park Inn by Radisson Macon
- Park Inn by Radisson Orange
- Park Inn by Radisson Nancy
- Park Inn by Radisson Lyon Ouest
- Radisson Blu Hotel, Aix-Les-Bain
- Les Loges du Park (unbranded)