NH sells hotels to pay off debt

NH announced a few months ago its intention to sell four or five of its small-size hotels. The strategic plan –kicked off with the sale of four major hotels to entrepreneur Amancio Ortega- intends to put on the market around 10 percent of the company’s real-estate assets with a view to both cushion the burden of its properties and collect some sellout cash to bankroll the group’s expansion policy.

Two of these small-size hotels have just been sold out. One of them is the 56-room NH Breton on Madrid’s Breton de los Herreros Street. The second hotel was the 43-room NH Express Delta in Tudela, Navarra.

Both resorts were purchased by a couple of entrepreneurs already linked to the chain because they own other NH establishments. The Breton Hotel will now be in the hands of Elier Goñi (also the owner of the NH Deuston in Bilbao), while the Delta joins the real-estate portfolio of Manuel Cosmen, proprietor of the NH Principado in Oviedo. NH will continue managing the two facilities.

Sources close to the operation indicated the Breton Hotel was sold for a figure in the neighborhood of eight to nine million euros, while the NH set his new owner back some two million euros. With this operation, NH now has bargaining leverage to cut down on its skyrocketing debt and clean up its financial act thanks to the surplus cash that went into its coffers.

Following the sale of the four hotels to Mr. Ortega for 91.4 million euros (Madrid’s Abascal, Pamplona’s Iruña Park, the Villa de Bilbao and the Lleida’s Pirineos), NH dropped two notches from 49 to 47 percent of all rooms owned, but it jumped from 33 to 35 percent of the total number of rented rooms.

The burden of rented rooms has also soared this year on the heels of the addition of Astron Hotels to the Spanish group’s balance spreadsheet. In February 2002, NH bought the German-owned chain with its almost fifty operational establishments in tow.

NH had also sold earlier last year the Golden Tulip Worldwide Co. to its current management team for 2.4 million euros. This company –in charge of managing the licenses issued under the Golden Tulip and Tulip Inn trademarks- had been purchased by NH for a similar figure a few months ago. Golden Tulip has over 300 hotels in 42 countries registered under its trademark.