PIF, the sovereign wealth fund of Saudi Arabia, has acquired 49% of Rocco Forte Hotels, as the oil-rich nation seeks to diversify its holdings.
London-based Rocco Forte Hotels was founded by Sir Rocco Forte and his sister, Olga Polizzi, in 1996, and currently operates 14 hotels and resorts in Europe, including Hotel Savoy, Florence; The Balmoral, Edinburgh; Brown’s Hotel, London; The Charles Hotel, Munich; Hotel de Rome, Berlin; and Hotel de Russie in Rome, which was recognized by HOTELS Magazine as the top hotel in the city in its inaugural “25×25 Top Hotels of the World.”
It is slated to open three more hotels by 2025: Rocco Forte House, Milan; The Carlton, Milan and Costa Smeralda, Sardinia.
The value of the transaction was not listed in a formal press release from Rocco Forte, but the The Financial Times valued the deal at $1.8 billion, including debt. Rocco Forte called the deal a “significant minority stake in the group,” by PIF. While the Forte family will retain majority ownership and control, the Italian entity CDPE Investimenti (CDPEI) is selling its entire stake.
PIF has pledged to accelerate expansion of the group with upwards of tens of millions of pounds, The Financial Times further reported. PIF’s investment will include an element of primary equity, which will accelerate the brand’s expansion in both existing and new global markets.
Sir Rocco Forte will remain executive chairman, alongside Olga Polizzi, who will continue as deputy chairman. He also told the FT that he expected more travel to his hotels from Middle East travelers based on the PIF’s investment.
“PIF is an excellent partner for us going forward,” said Sir Rocco Forte. “We have established an extremely good relationship during the course of our negotiations. They share the same vision for the brand and the future strategy of the group with the same ambition to take a long-term view. I look forward to working with PIF to expand the group and improve the high level of service we offer our customers.
“We thank CDPEI for having shared the past fruitful eight years during which we both successfully accomplished the mission we shared when we started the journey, having significantly enhanced the value of the company and increased the group’s presence in Italy and across Europe.”
“Our investment in Rocco Forte Hotels reflects PIF’s confidence in both the commercial opportunity and strength of the international hospitality and tourism industries that have shown remarkable resilience in recent years,” said Turqi Al Nowaiser, deputy governor and head of international investments division at PIF. “As active long-term investors, PIF will continue to invest strategically in promising sectors to achieve sustainable returns globally.”
PIF’s investment in Rocco Forte Hotels is proof of concept of hospitality as a strong investment class, one that is even more attractive in a higher interest rate environment, argued Jeanelle Johnson, principal, lead client partner, and travel, transportation and hospitality sector co-leader for PwC US. Of PIF’s new position in Rocco Forte, she said it illustrates the ROI and yield available from the hotel industry.
“The hospitality sector’s ability to attract investment from various sources, including private wealth funds, underscores its strong potential for growth and returns,” she said. “Private wealth funds, seeking to diversify their portfolios and capitalize on the industry’s resilience, are increasingly recognizing the value of investing in hotels and resorts. This influx of capital not only fuels the expansion of existing properties, but also drives the development of new hospitality projects, further solidifying the sector’s position as an attractive investment opportunity.”
Like others in the region, such as Dubai, Saudi Arabia has been looking to wean itself off of oil, its primary commodity, by investing in alternatives, such as travel and hospitality. Saudi Arabia is seeking to do this through Vision 2030, a government program launched by the Kingdom of Saudi Arabia in 2016 with a goal of increased diversification economically, socially and culturally.
At the middle of this is the PIF, or Public Investment Fund, which is valued at $700 billion and has made some high-profile investments inside and outside travel and hospitality. In August 2022, it, along with London-based real estate investment firm Cain International, invested $900 million in another luxury hotel operator, Aman Resorts. The infusion valued Aman Group, with 34 hotels and 12 branded residences, at more than US$3 billion.
Last year, PIF invested $400 million in luxury hotel operator Habitas.
More prominent is the PIF’s bankrolling of LIV Golf, which had its inaugural season in 2022, and lured many top golfers from the PGA Tour by extending vast cash sums to join.
Completion of the transaction is subject to regulatory approval.