On the heels of initial success with his ultra-luxury Capella hotel brand since it launched in 2002, veteran hotelier Horst Schulze is taking on an equity partner to ramp up expansion. At the same time, Schulze has renamed his company Capella Hotel Group, Atlanta, as he wants to take advantage of what he considers a halo effect the Capella brand has created with owners, developers and guests.
Private equity firm Stoneleigh Capital, Norwalk, Connecticut, is taking a minority stake and three seats on the board of Schulze’s company with 14 hotels open (five Capellas, two Solís and seven shorter-term independent management contracts) to give the company formerly known as West Paces Hotel Group a seat at the deal-making bargaining table potentially double its size inside three years. Nine additional Capella and Solis hotels are set to open by 2013 to reach the 16-unit mark, and Schulze told HOTELS on Tuesday he thinks that this partnership will allow Capella Hotel Group to double the size of the portfolio by the end of 2014.
Currently, Capella hotels are under construction in Niseko, Japan; Washington, D.C.; Bangkok; Sochi, Russia; and the Riviera Maya in Mexico. There are Solís being completed in Nanjing, China, Qatar, Sochi and Sunny Isles, Florida.
Stoneleigh will be an active partner with the ability to provide sliver equity, mezzanine loans and, Schulze said, will even consider outright acquisitions in markets that can support one of the two Capella brands. Schulze is targeting major global gateways and destination markets for expansion and said Stoneleigh is initially putting up US$60 million for sliver equity positions in new deals. Schulze said the new team is already negotiating to work with a European fund that plans to spend about 500 million euros on hotel development and acquisition.
Schulze is bullish about the potential of his brands, especially Capella, because of the performance to date. He said customer satisfaction scores for his smaller hotels that focus on truly personalized service have been “mindboggling.” He also points to the hotel in Singapore as the city/state’s rate and occupancy leader and another in Dusseldorf as number two in RevPAR in all of Germany.
“After taking over the Ritz-Carlton in Bali two years ago and running it as an Ayana everyone questioned what I could do without a brand,” Schulze said. “This year it will finish with the highest occupancy and its best success in 17 years. As a result, there is an unbelievable flow of interest in us taking over existing hotels and developing new hotels. This is the right time to find a partner who wants to do these types of investments.”
Schulze add that right now he sees 70 or 80 locations where his company could grow and includes some destination locations such as Cabo San Lucas, Angkor Wat in Cambodia and on Hainan Island in China.
