Landmark to buy another London hotel
October 16, 2000
THE Landmark Group, led by hotel tycoon Jatuporn Sihanatkathakul, is planning to buy another luxury hotel in London, adding it to an expanding property portfolio that already includes the Royal Lancaster Hotel London and the Landmark London.
In an interview with The Nation, Jatuporn declined to disclose the name of the hotel because of the ongoing due diligence process. Industry sources said it is likely to be in the Kensington area.
"The property will come with about 300 rooms. We expect to finalise the deal over the next two to three months," Jatuporn said.
As for the price tag, he said: "It will be cheaper than the previous two hotels we bought."
Jatuporn added that UK banks will be participating in the financing of the hotel takeover. The Landmark Group is using the financial services of Hongkong Shanghai Banking Corp and National Westminster Bank.
Jatuporn led the Landmark Group, controlled by his family, into the London hotel market in the early 1990s, first acquiring the Royal Lancaster Hotel London and then the Landmark London. At that time, the UK property market was in a severe downturn, while Thailand was experiencing a boom.
Jatuporn said he had perceived the growing risk to the Thai property market due to the "gold rush" of developers going into the hotel business, spurred by Board of Investment promotional incentives. It subsequently resulted in an oversupply and caused a crisis in the banking system.
The Royal Lancaster was acquired in 1994 for £75 million (Bt3 billion), and the Landmark London in 1995 for £70 million At the time, the baht was trading at about Bt40 to the pound.
Since then, the value of both the Royal Lancaster and the Landmark London, which enjoy an average occupancy rate of 80 per cent, has appreciated steadily. Jatuporn said the most recent property appraisals, conducted by surveyors in London, found that the value of both hotels has doubled.
This means that the Royal Lancaster and the Landmark London each carry a market price of about £140 million. At the present exchange rate of Bt60 to the pound, the two hotels are worth about Bt8 billion each.
In effect, therefore, the Landmark Group would reap a double profit - in property value appreciation and in exchange rate gains - of a combined Bt10 billion if the two properties were to be sold today.
But Jatuporn said the Landmark Group has no plan to sell the two hotels.
"During the IMF [International Monetary Fund] period, a lot of people called in to inquire whether we had any plan to sell off our London hotels. But I said no. We're in the hotel business and if we sell them out, we don't know what else to do," he said.
The Landmark Group also operates the five-star Landmark Bangkok, a 31-storey hotel located on Sukhumvit Road. The Landmark Bangkok has 415 rooms and 55 luxury suites.
BY THANONG KHANTHONG