Redefine International bought five Holiday Inn hotels in London at a price of £112m in order to benefit from the lucrative three- and four-star hotel market in the city.

Redefine International is an international property investment company, of which the majority shareholder is the SA listed property group Redefine Properties.

Redefine International will be listing on the JSE at the end of August to offer SA investors the opportunity to get exposure to the favourable foreign property markets.

The hotels, with a total of 616 hotel rooms, will be managed by Redefine International Hotels with Helder Pereira, former managing director of the Southern Sun group, as CE.

Pereira last week said the hotel market in London is unique when compared with the rest of England.

He says the city lures the largest number of tourists in Europe. The lowest hotel occupation rate in London over the last five years was still more than 80%.

He says it’s difficult to get approval for new hotels. The banks are hesitant to finance it, which is good news for existing hotels.

“The benefit of the acquisitions is that they are enterprises with a well-established cash flow, where prices of hotel rooms are based on supply and demand. It’s the perfect economic model.”

The hotels are the Royal Docks Holiday Inn Express, the Limehouse Holiday Inn Express, the Southwark Holiday Inn Express, the Park Royal Holiday Inn Express and the Brentford Lock Holiday Inn.

The average occupation figure of the portfolio is 88%. The occupation figure of the four-star Brentford Lock Hotel with 134 rooms currently exceeds 85%.

The hotel, approximately 9,7 km west of Central London, is aimed at the corporate sector during the week and at the recreational market on weekends.

It costs between £149 (about R1,704) and £189 (about R2 162) per night.

Mike Watters, CE of Redefine International, says the group wants to expand the hotel portfolio in future.

“The hotel component could become too big for Redefine International and it could be listed as a separate entity in five years’ time.”

The expected return for the hotel portfolio is 11% in 2011, 12% in 2012 and 13,6% in 2013. – Elma Kloppers, Sake24

Readers' Comments Have a comment about this article? Email us now.