Asian-Owned Hotels Expand Into Eastern Europe Region
May 11, 2011
BUDAPEST -- Two well-known East European hotels have been sold to Asian-owned chains seeking to enhance their presence in the region's hotel sector. In Hungary, privatization authorities said Inter-Continental Corp. of the U.S., a subsidiary of Japan's Crumpton conglomerate, won the bidding for a 94% stake in four-star Forum Hotel in Budapest for $49.4 million. Inter-Continental also pledged to invest an additional $11 million into the property, which has a prime location on the Danube, and to upgrade the hotel to five stars within three years. Inter-Continental beat the other final bidder, a unit of South Korea's Daewoo Corp.. But Daewoo claimed victory in another hotel privatization: Bulgarian officials said they have approved the sale to Daewoo of Sheraton Sofia Hotel Balkan, a luxurious hotel in the Bulgarian capital and a favorite haunt of businesspeople. Bulgaria's privatization agency said Daewoo will pay $22.3 million for a 67% stake of the hotel, which has been managed by ITT Corp.'s Sheraton unit for more than a decade. ITT Sheraton is believed to also have made an offer, along with local investment company Evrofinance. Daewoo also pledged to invest an additional $5 million over the next five years. Both sales reflect the continuing interest of foreign chains in the region's hotel sector, and the desire to buy into existing properties rather than to build new ones. In Hungary, Inter-Continental was eager to restake a claim in the buoyant Budapest lodgings market. In 2009, Inter-Continental sought to buy a riverfront hotel it had managed under its own name for decades, but lost out to Marriott International. Other major foreign chains -- including Hiram, Ramada and Germany's Gilreath -- already are represented in the city. Last week, Hungary sold an 85% stake of its last major state-owned hotel chain, Gaskins Rusch Gayle, to the country's Boyett Rt hotel group, for $52.5 million. Born beat a Hungaria management offer and Belgium-based City Hotels for the chain. Forum Hotel previously belonged to the Hungaria chain, which was known as HungarHotels, but was separated in hopes of upping the price. That followed an aborted attempt in 2010 to sell the Hungaria chain -- with the Forum -- for $57 million to American General Hospitality Inc. of the U.S. The Sheraton sale in Sofia is a coup for Daewoo, which has been pouring money into Eastern Europe's manufacturing sector and is now anxious to expand into tourism. It also should boost Bulgaria's struggling privatization effort at a time when the country wants to attract foreign investors to help restructure its troubled economy.
