Conglomerate Sahara India Pariwar completed the $575 million purchase of the majority of Fairmont-managed The Plaza Hotel in New York yesterday and plans to make improvements to the property.
The conglomerate now owns 75 percent of The Plaza, while the remaining 25 percent is owned by Saudi Arabian investment company Kingdom Holding Co. The purchase was initiated this summer and was completed Nov. 27.
“I think the Plaza is an iconic property in New York and it seemed like an attractive investment,” said Greg Rice, president of Solid Rock Advisors, New York. “It is great for a long-term investor since it is one of the world’s most valuable pieces of real estate.
“Sahara India Pariwar’s intent was to purchase the entire hotel completely, but Kingdom Holding Co. did not want to sell its share,” he said.
“The conglomerate does plan on making some improvements to the hotel, but decisions have not been made yet.”
Solid Rock Advisors advised the seller El Ad U.S. Holding Inc. in this transaction.
Fairmont Hotels & Resorts was unable to comment directly.
Keeping the legacy
Fairmont will continue its long-term agreement to operate The Plaza Hotel, but Sahara India Pariwar is planning to make some changes.
The Plaza Hotel
The Plaza expects guest service to continue as usual despite the change in ownership, per Fairmont.
“Fairmont gets to keep the management agreement, which is good for the brand as a source of revenue and for maintaining its flag in this important market,” said Ron Kurtz, president of American Affluence Research Center, Atlanta.
“Sahara India Pariwar may be more inclined and able to invest in property improvements than El Ad U.S. Holdings,” he said. “It is not yet clear whether this will add value to The Plaza.
“The new owners may simply be parking money in an asset that they believe will appreciate in value.”
Sahara India Pariwar owns hotels, news media, entertainment channels, sports teams, housing developments, a hospital, a film production studio and other investments.
The group’s other hotels are the 5-star Sahara Star, Mumbai, and the Grosvenor House Hotel, London.
The conglomerate’s founder is Subrata Roy Sahara. It is located in Lucknow, Uttar Pradesh, India.
The minority owner Kingdom Holding Co. has holdings in numerous companies around the world including Four Seasons, Apple, Time Warner, Pepsi, Citigroup and Walt Disney.
Kingdom Holding Co. is based in Riyadh, Saudi Arabia. Its chairman/CEO is HRH Prince Alwaleed Bin Talal, a member of the Saudi royal family.
“Sahara India Pariwar is already in the luxury hotel business and this gives it an iconic property in perhaps the world’s key hotel market,” Mr. Kurtz said. “This may be a link in a strategic partnership with Kingdom Holding Co., which has great resources to invest in other ventures.”
Offer on the table
Recently an offer for another iconic New York hotel was made.
A $900 million offer was on the table for the owner of Four Seasons Hotels and Resorts’ New York property. If the deal was to go through, the hotel would need to quickly reassert its presence in the market, experts said.
On Nov. 4, an unidentified buyer offered owner Ty Warner $900 million for the Four Seasons Hotel New York. Since the brand has essentially created a landmark in the market out of its flagship property, the potential transition could be tricky, but experts agree that Four Seasons is sure to bounce back quickly (see story).
The owner of any luxury hotel property should know what it wants to get out of the investment to successfully and profitably operate it.
“The conglomerate needs to have a long-term perspective for its investment in this property, especially given the price per room that they are paying,” Mr. Kurtz said.
By Erin Shea