InterContinental Hotels Group (IHG) continues to bolt-on luxury brands with its early Wednesday announced acquisition of Six Senses Hotels Resorts Spas’ brands and operating companies from Pegasus Capital Advisors for US$300 million in cash.
The news follows IHG’s 2015 acquisition of the Kimpton hotel brand and last October’s deal for Regent Hotels & Resorts. It takes IHG’s portfolio of open and pipeline luxury hotels to 400 (108,000 rooms) globally.
Six Senses, which IHG said will sit atop its luxury portfolio, currently manages 16 hotels and resorts, with 18 management contracts signed into its pipeline, and more than 50 further deals under active discussion. The deal does not include any real estate.
All Six Senses owners have been informed about the deal and the response has been positive, according to a Six Senses spokeswoman. An IHG spokesperson added, “With our focus on protecting what’s special about Six Senses, we don’t expect this [attrition] to be an issue.”
Six Senses CEO Neil Jacobs and President Bernhard Bohnenberger had kept the months-long negotiations with IHG a well-protected secret, but they had spoken to some of their owners. “I thought some of them would go nuts but they were universally supportive,” Jacobs exclusively told HOTELS Contributor Mary Gostelow. “IHG has an unusually strong bond with its owners.”
Jacob also told Gostelow, “The only way we would allow Six Senses to be sold to IHG would be if we were left alone.” And that appears to be the case as Jacobs will remain as CEO, the 95-strong management team stays in place and the company will continue to operate out of its Bangkok headquarters. It sounds similar to the deal IHG made with Kimpton, allowing management to maintain its culture and style.
“I now report only to IHG CEO Keith Barr,” Jacobs added. “I am really encouraged by the extensive talks I had with Mike DeFrino, CEO of Kimpton, which IHG bought in 2015. He said IHG has done exactly what it promised at that time.”
IHG CEO Keith Barr said in a statement that he believes they can expand Six Senses to more than 60 properties globally over the next decade.
“Yes, we will certainly be 50 open properties within five years,” Jacobs said. “This month, for instance, we open the first three of our five resorts in Bhutan, and we have a Cambodian resort accepting its first guests on March 1. Israel’s Six Senses Shaharut, 58 keys plus camel stables, is scheduled for a September opening.”
The deal also includes Six Senses’ spa operations, which are core to the brand’s luxury and wellness positioning. Six Senses operates 37 spas in total under the Six Senses and LivNordic brand names, and also provides spa consultancy services.
Six Senses currently generates fee revenues of more than US$13 million. The acquisition is expected to be EBITDA breakeven in year two and to generate a return approximately equal to its cost of capital by year four.
Jacobs further stated that he is looking forward to having the professional back end support that IHG will provide. At the moment, data on the typical Six Senses’ loyalist is, perhaps, rudimentary with Jacobs adding, “We average 30% repeats across the portfolio, but our CRM platform has only been up for a few months.”
“As I said already, if it had been my choice, alone, I would have chosen IHG anyway because of its commitment and its humility,” Jacobs said. “It seems to me to be the mega-company that is not afraid to say, ‘you, not we, are the masters when it comes to wellness.’”
The IHG family, to quote Jacobs, now includes a brand that is “unusual, quirky, innovative, a small group that cares about the planet and its people while providing extraordinary content for customers.”