Published on : Tuesday, November 8, 2016
Sistema PJSFC announces that its subsidiary Sistema Hotel Management LLC has entered into a binding agreement to acquire 100% stakes in nine Regional Hotel Chain hotels for a consideration of RUB 2.6 billion from VIYM, a private equity fund manager operating in the CIS and Europe.
Completion of the transaction is subject to a number of conditions typical of agreements of this type.
The hotel network includes nine operational properties: Courtyard by Marriott Paveletskaya (Moscow), Holiday Inn Express (Voronezh) and seven hotels operating under the Park Inn brand in the cities of Astrakhan, Izhevsk, Kazan, Novosibirsk, Sochi, Volgograd, and Yaroslavl. The properties include a total of 1,379 rooms across 87,613 square metres. The consolidated debt of the properties is RUB 4 billion. All the hotels being acquired were constructed over the last five years and do not currently require any capital expenditure. Holiday Inn Express (Voronezh), Park Inn (Volgograd), Park Inn (Novosibirsk) and Park Inn (Sochi) are opened in 2014-2015 and have significant potential to increase profitability as performance targets are achieved.
Sistema President Mikhail Shamolin said: “Against the backdrop of increased demand for domestic travel we see strong growth opportunities in the Russian hotel industry. The current economic situation allowed us to acquire fully operational, high-quality hotel assets for less than what it would cost to build comparable properties. Our assessment is that construction of hotels with the same number of rooms would take four years and cost considerably more.
“We are acquiring a group of hotels operating under international brands located in key Russian destinations for business travel, including several cities that will host the World Cup in 2018. The properties have significant potential to increase both financial results and valuations. With their addition to Sistema’s portfolio we will occupy a leading position in Russia, significantly increasing the Corporation’s share of the hotel market.”