U City on Euro buying spree

BANGKOK, 27 February 2017: Bangkok-based U City Public Company Limited has announced it will purchase eight hotels and a management company with 16 properties in Europe.

Phuket-based C9 Hotelworks broke news of the latest U City expansion in an update released Monday.

U City PCL reported to the Stock Exchange of Thailand (SET) details of its “strategic expansion into Europe”, late last week.

Upon completion of the transaction, scheduled for 31 July, U City’s hospitality business will expand across a further nine European countries.

The current acquisition gives the group 100% ownership of the Austrian company,  AcquiCo, to acquire Vienna International Hotel Management AG (“Vienna House”) and eight hotels in central and eastern Europe from Austrian- and Polish-listed property developer Warimpex Finanz- und Beteiligungs AG.

U City CEO, Piyaporn Phanachet, commented on the investment: “This is U City’s strategic acquisition will add another 4,100 owned hotel keys at THB2.6 million per key to our portfolio as well as international brands such as: upscale, design brand Vienna House; the smart-casual Vienna House Easy brand; business-inclined angelo by Vienna House brand; and the upscale, modern, designer andel’s by Vienna House brand, which will be a platform for further growth.”

The acquisition comprises a portfolio of 24 hotels in the form of freehold, finance lease and operating lease hotels totaling over 4,100 keys.

Of that total, 16 hotels are under Vienna House located in cities and towns across Germany. Another 8 hotels from Warimpex are located in cities and towns in Czech Republic, Poland and Romania. In addition, the transaction includes a management platform that operates the 24 hotels, plus an additional 12 third party hotels (together totaling over 6,700 keys) located in cities and towns in Austria, Belarus, Czech Republic, France, Germany, Russia and Slovakia.

U City will be financing the transaction with a combination of new loans from financial institutions and existing cash.

The deal is subject to anti-trust review and other conditions precedent, which are expected to be concluded by 31 July.

The transaction, which is valued at just more than THB12 billion, secures full ownership of the Austrian owning company AcquiCo and Vienna Hotel Management AG. They have eight hotels located in central and eastern Europe.

C9 Hotelworks noted that U City was formerly Natural Park PLC and in 2015 it bought over BTS Asset Company Limited and Kamkoong Property Company Limited.

Capital flight from Thailand into Europe has continued despite the BREXIT scare, given rising development and operating costs in Asia and relative favorable value of  hotel assets outside the region, C9 Hotelworks claimed its market observations.

(Source:  C9 Hotelworks and SET)