S Hotels and Resorts to Sell Underperforming Assets in the United Kingdom

S Hotels and Resorts, the hospitality arm of Thailand's Singha Estate PCL, is planning to divest a selection of its underperforming hotel assets in the United Kingdom.

The company intends to sell the 73-key Mercure Newbury Elcot Park for GBP 4.25 million (approximately THB 186 million).

Five other UK hotels in the portfolio, identified as non-core assets, may also be sold.

Proceed from the sales will be used to reinvest in the renovation of core hotel assets.

The sale forms part of the company’s portfolio enhancement strategy which comprises of the following three elements:

Asset Enhancement: The company is evaluating to put capex to renovate core hotel assets – the asset that provides consistently solid performance and could generate higher EBITDA with proper enhancement program. These enhancements will boost the hotels’ competitive advantage and extend the profitability of those properties.

Asset Disposal: The company intends to dispose of some assets that have limitation on profit generation, but potentially can be sold at market price. The company targets the sale of 4-6 hotels which fall under these criteria and is currently in negotiations for potential buyers. The transactions are expected to be completed in 2021-2022.

Asset Optimization: 60% of the portfolio is fallen into this category. We would seek further opportunities to enhance the efficiency of this group to allow the asset to become a core asset e.g. conversion of leasehold to freehold assets.

“Strategically, we believe the optimal number of hotels in this portfolio should be around 20-21 hotels and in the medium to long run we wish to uplift the EBITDA performance of this portfolio back to the peak level of GBP 18 million,” said Mr. Dirk De Cuyper, Chief Executive Officer of S Hotels & Resorts. “This is a part of our strategic direction to focus on maximising our portfolio returns and creating value for the company and its investors.”

In February 2021, S Hotels & Resorts invested THB 560 million to purchase additional 50% stakes in 26 of its 29 UK hotels, raising its total ownership of these properties to 100%.

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