End of Maria Reig's adventure at the helm of the Mandarin Oriental Hotel in Barcelona. The Andorran businesswoman, owner of Reig Capital Group, has sold the luxurious Barcelona establishment to the Saudi family investment group The Olayan Group, which enters Barcelona in a big way after having bet on Madrid in 2015 with the purchase of 50% of the Hotel Ritz.
The transaction, according to Cinco Días, has closed for a record amount of 240 million euros and is added to the recent acquisition of the Hotel Sofia by the fund Blasson Property Investments and the French insurance group Axa for 180 million euros.
"This operation represents the culmination of Reig Capital Group's divestment strategy in the hotel sector, as it is the last hotel asset in the company's hands," explained the investment company of Maria Reig, who inaugurated the exclusive five-star grand luxury hotel on Paseo de Gràcia in 2010. The establishment has 120 rooms. "During these 13 years, the hotel has contributed to positioning the luxury and premium hotel sector in Spain, and especially in Barcelona, at the highest level", pointed out the firm.
According to Reig Capital, the Mandarin Oriental Barcelona "has emerged as a successful project, consolidating itself as the city's benchmark hotel and one of the most iconic hotels in Spain." In 2022, assures the selling company, the establishment "achieved the best operational results since its opening" thanks to the significant increase in room prices in Barcelona and the recovery of the tourism sector after the pandemic crisis.
The sale includes both the property, located at numbers 38 and 40 of Paseo de Gràcia, as well as the operation of the hotel and the street-level commercial premises. Likewise, the new owners will also be able to continue operating the 22 suites located in the adjacent building, at number 36, which is owned by Isak Andic, owner of Mango.
According to Expansión, The Olayan Group has prevailed in the bid for the Mandarin over the French fund Orion and the Abu Dhabi Investment Authority (ADIA) fund, which had also shown interest in the asset during the divestment process advised by the real estate consultancy JLL. Savills has advised the buyer and the law firms Baker & McKenzie and Andersen and the consultancy KPMG have also participated in the transaction.
The money from the sale will go to the Californian fund Farallon, which in 2020 acquired from CaixaBank the substantial debt that Reig Capital had contracted with the financial entity. The American firm bought credits for 445 million contracted by the Andorran businesswoman and linked both to the Mandarin Hotel and to her investment in Crèdit Andorrà, with a significant discount.
The Olayan Group is a family company from Saudi Arabia that has just celebrated its 75th anniversary. Founded in 1947 by Suliman Saleh Olayan, the group is currently in the hands of the third generation and is characterized by executing long-term investments, that is, permanent capital in the companies it enters. Through its real estate division ---one of its four business areas---, The Olayan owns emblematic buildings in cities such as New York (550 Madison Avenue), Paris and London (The Knightsbridge Estate) and has a portfolio of 40,000 apartments in the United States.
In Madrid, The Olayan Group bought 50% of the Ritz Hotel in 2015 in alliance, precisely with the Hong Kong hotel group Mandarin Oriental, which owns the other 50%.
Barcelona will reach 4,200 luxury rooms this year
According to a recent JLL report, the luxury hotel sector is experiencing a very good moment thanks to the growth of global wealth, which "drives luxury travel to new heights." "High net worth individuals generate approximately 36% of global travel spending and nearly 70% of luxury travel spending. With the increase in high net worth individuals worldwide, luxury travel is expected to increase," says the consultancy, after pointing out that the rates of this type of hotel "become more expensive as demand grows." JLL confirms that "institutional investors are leaning towards luxury hotels, backed by rising returns," which suggests that this type of asset "will continue to attract high levels of investment, especially in major cities, as international travel resurfaces."
The JLL study also highlights that Madrid and Barcelona will close 2023 with nearly 7,000 luxury hotel rooms, representing a 67% growth in the last decade. "Barcelona remains one of the most consolidated urban hotel markets in Europe. Despite development restrictions imposed by the current hotel moratorium, the city's luxury room supply is close to doubling by the end of this year compared to figures from a decade ago, reaching a total of about 4,200 luxury hotel rooms," compared to the 2,700 that Madrid will reach this year.
JLL points out that the new luxury hotels in the Catalan capital will be located in non-traditional areas for this type of establishment, such as the future SLS (an Accor brand) which is rising in Port Forum (Sant Adrià).
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