Skift Take

InterContinental Hotel Group’s purchase of Six Senses Hotels Resorts Spas is consistent with its drive to boost its luxury portfolio with small yet well-defined brands that do not cannibalize one another. So smart.

InterContinental Hotels Group (IHG) is further boosting its luxury portfolio with the acquisition of Bangkok-based Six Senses Hotels Resorts Spas for $300 million cash from Pegasus Capital Advisors.

The acquisition, announced Wednesday, brings IHG’s portfolio of open and pipeline luxury hotels to 400 hotels with 108,000 rooms globally.

The deal, which includes all of Six Senses’ brands and operating companies and excludes any real estate assets, does not come as a surprise. As Skift reported last October, IHG is still in the market for small acquisitions. Six Senses, on the other hand, “had been sniffed at” at various points over the past two to three years as private equity fund Pegasus “was coming under some pressure to return principal to their investors, but only if/when it made sufficient sense,” said a source.

Don’t Miss IHG CEO Keith Barr on Stage at Skift Forum Europe This April

Good fit

IHG is widely seen as having added another Asian trophy, after its acquisition of the Regent brand, whose roots were also in Asia. Not only that, Six Senses gives IHG a wellness plug; its core themes are guest rejuvenation, reconnection, wellness, and sustainability.

“Fits really well in IHG’s brand stack, and scratches an itch they [IHG] have had for a long time — an Asian luxury resort/wellness platform,” commented Robert Williams, partner at Withers Worldwide based in Singapore and Sydney.

“Solid pricing for private equity sellers Pegasus Capital Advisors, which looks to be backed substantially by the development pipeline Six Senses has lined up,” he added.

Six Senses currently manages 16 hotels and resorts, with 18 management contracts signed into its pipeline. With a further 50 deals under active discussion, IHG expects to accelerate Six Senses’ growth globally to more than 60 hotels over the next 10 years. This includes bringing Six Senses to important urban markets, with a property already under construction in West Chelsea, Manhattan, New York City.

“It’s another significant and smart acquisition by IHG [after Regent and Kimpton] to expand and enhance its brand portfolio/offering,” said Robert Hecker, managing director of Pacific Asia Horwath HTL.

“Each widens IHG’s customer profile with each acquired brand augmenting rather than cannibalizing any of the existing brands, thus filling holes in IHG’s brand portfolio without the chain having to create from scratch.

“In addition, IHG’s infrastructure supports the international growth these brands would otherwise not have been able to achieve under their previously existing ownership/infrastructure.”

Horwath HTL was involved in the due diligence on this deal, a global assignment of its offices in six continents where the existing and pipeline deals are. As most are in Asia, the Singapore office served as the lead coordinator.

And now there are four

Six Senses will sit at the top of IHG’s luxury portfolio, complementing InterContinental Hotels & Resorts, Regent Hotels & Resorts, and Kimpton Hotels & Restaurants, said the chain.

IHG’s CEO Keith Barr said, “Six Senses is an outstanding brand in the top-tier of luxury and one we’ve admired for some time. You only have to look at its iconic hotels and resorts to see how this acquisition will further round out our luxury offer. With a focus on wellness and sustainability, Six Senses has been voted the world’s top hotel brand for the past two years, which is testament to its impressive management team who bring deep experience to IHG’s luxury operations.

“Six Senses’ attractive development pipeline provides us with a platform for high quality growth. With the power of the IHG enterprise, we believe we can expand Six Senses to more than 60 properties globally over the next decade. This acquisition continues the progress we’ve made against the strategic initiatives we outlined a year ago, which included a commitment to adding new brands in the fast-growing $60 billion luxury segment.”

Just last week, Barr told Skift how he wanted to make IHG more nimble in a competitive marketplace. “My aspiration is to have a full robust brand portfolio from the upper end of luxury into mainstream, and we still have some gaps there,” he told Skift at the Americas Lodging Investment Summit in Los Angeles.

Six Senses Hotels Resorts Spas CEO Neil Jacobs added Wednesday on the deal: “An outstanding business has been built over the past 20 years, and a respected portfolio of hotels and resorts, with wellness and sustainability at their heart. This distinct proposition and the popularity of our award-winning estate, combined with IHG’s scale, systems and expertise gives us the opportunity to accelerate Six Senses’ global growth.”

Meanwhile, contacted by Skift, Six Senses’ founder, Sonu Shivdasani, who now operates the Soneva brand which he started out with, said, “I was delighted to learn of this news. InterContinental has paid a good price and this will represent a reasonable return on investment for Pegasus over their seven-year hold. Six Senses is an iconic brand and the focus on strong differentiating within hospitality is clearly paying off.

“I am pleased that Six Senses is now part of the InterContinental portfolio. InterContinental has a great public reputation as a hotel operator with strong human resource policies and an employee focus culture which is very similar to what we cultivated in the past with Six Senses. Intercontinental is also a company that preserves the brands that it acquires and allows them to thrive.

“I wish Intercontinental and Six Senses all the success with their future.”

Don’t Miss IHG CEO Keith Barr on Stage at Skift Forum Europe This April

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Tags: ihg, luxury, mergers and acquisitions, six senses

Photo credit: Cook & Tras Social Library, an intimate restaurant and bar at Six Senses Maxwell, Singapore. Under IHG, there could be 60 Six Senses properties globally in 10 years. Six Senses Hotels Resorts Spas

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