Mubadala, Kor Joined At Hip
Abu Dhabi investment company takes 50% stake in management group.
By Adam Kirby, Associate Editor -- Hotels, 11/30/2008 11:00:00 PM
Upstarts from halfway around the world, Los Angeles-based Kor Hotel Group and Abu Dhabi-based Mubadala Development Co. view one another as perfect partners for their respective global expansion goals. Through a strategic partnership spurred by Mubadala's recent acquisition of 50% of Kor, the two companies are pursuing aggressive expansion plans for Kor's luxury Tides and Viceroy brands in several key gateway cities and top resort destinations.
For Kor, the benefits come via Mubadala's many relationships with global developers and capital partners—prominent joint venture partners for Mubadala's Real Estate & Hospitality portfolio include The John Buck Co., Chicago, and Singapore-based CapitaLand. Mubadala also controls a significant stake in Related Cos.
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Kor’s Viceroy brand is debuting in Anguilla. |
In turn, Mubadala will leverage Kor's hotel development and management expertise to establish a strong footprint in the hospitality sector. “Kor's Viceroy and Tides brands have a reputation for fine luxury, avant-garde design, and intuitive service, which align perfectly with our vision. This partnership signifies a new chapter in an exciting story for Viceroy and Tides—we believe they are poised for tremendous growth globally,” said Waleed Al Mokarrab Al Muhairi, chief operating officer of Mubadala, in a statement. Mubadala is a wholly owned entity of the Abu Dhabi government.
The disastrous credit market has cut into the speed and scope of Kor's expansion goals, says Kor President Nicholas Clayton admits. However, the partnership with a flush sovereign investment fund with Mubadala should help the company weather the economic storm fairly well, in both the short and long run. “Our partnership speaks to our long-term credibility, and that's very helpful,” Clayton says. “If somebody wants to do a 25-year management partner with our company, they need to know that we'll be around in the 6th or 7th or 10th year of the partnership, and they know we will be. That gives us a leg up on our competition.”
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Kor President Nicholas Clayton |
Kor is being tucked into Mubadala's Real Estate & Hospitality portfolio as its first investment in the hospitality sector. Kor will increase its presence in the Middle East, North Africa and Asia under the partnership, with business and leisure developments planned to open in Abu Dhabi by 2012. The goal is for a portfolio of 40 properties by 2013—25 open hotels and resorts and 15 more in development. Kor currently has 10 properties open and six more in the pipeline, including the soon-to-open Viceroy Anguilla and Viceroy Miami.
“What was so compelling was that they wanted to establish themselves in the luxury hospitality positioning and be part of something that was built from the early days,” says Clayton, “and we wanted a strong partner that would help us become an international hotel company. So the marriage was very fruitful.
“We're a very tight-knit, joined-at-the-hip partnership,” Clayton says.
Not surprisingly, the partnership will initially focus on Viceroy projects in the Middle East, starting with a Viceroy in Abu Dhabi, plus several other projects in the region yet to be announced. Kor and Mubadala also have their sights set on establishing Viceroy properties in the key city centers of Europe and Asia—namely Paris, London and Hong Kong, and other big capital cities. Clayton calls these “brand-defining” locales.
Kor and Mubadala has growth aspirations for the resort-oriented Tides brand, as well. Potential Tides markets are non-seasonal destinations where high-demand continues despite the economic downturn and where expected RevPAR makes high-end luxury sustainable. Clayton points to Bali and Thailand beach destinations as likely near-term targets. “Whatever the scenario, we're looking to go into the markets that we're not (in),” Clayton says. “They're out there on our behalf doing that.”
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