Sandra Lane

  • Last Updated: June 16. 2008 11:38PM UAE / June 16. 2008 7:38PM GMT

In its statement yesterday, Barwa said that “the investment came to strengthen the firm’s strategic expansion in Europe”, but did not provide a value for the deal. iStockphoto

Barwa, the Doha-based property investor and developer, said yesterday that it had bought two of Switzerland’s best known heritage hotels.

In a statement on the Doha bourse website, Barwa said that it had acquired the Schweizerhof in Berne and the Royal Savoy in Lausanne, both of which it would renovate, before appointing new operators.

The two hotels are among several historic properties that have been owned for several years by a European group called Rosebud Hotels Holding. According to a 2005 report by swissinfo.ch, a news website operated by the Swiss Broadcasting Corporation, the Schweizerhof has been closed since March that year, “ostensibly for renovations”, while Rosebud sought a buyer for it. The report described Rosebud’s owners as “anonymous investors”.

Barwa announced in May last year that it had taken on the “ownership, development and refurbishing” of seven hotels in Switzerland for an investment of 454 million Qatar rials (Dh458m). It said that it had set up a European subsidiary, Barwa Luxembourg, to manage the redevelopment, which it expected to complete within three years.

Barwa’s website states that it “will work in partnership with” Rosebud Hotels Holding. Attempts to contact a Barwa spokesman yesterday to clarify whether Barwa owned Rosebud were unsuccessful.

In its statement yesterday, Barwa said that “the investment came to strengthen the firm’s strategic expansion in Europe”, but did not provide a value for the deal.

Two deals involving similar properties in the past three years may be a guide to the value of Barwa’s deal. The UK-based Swiss investor, Urs Schwarzenbach, has spent about 250 million Swiss francs (Dh882m) buying and renovating Zürich’s iconic Dolder Grand, which reopened last month, while another Swiss businessman, Thomas Straumann is widely believed to have invested 100m francs in the Drei Königen in Basel, soon after spending 60m francs on reinvigorating Gstaad’s Grand Hotel Bellevue. Of these hotels, the Drei Königen is the most similar in scale and style to Barwa’s Schweizerhof.

Upmarket hotels in Switzerland are a sound investment, according to Fiorenzo Fässler, the managing director of Swiss Deluxe Hotels, a marketing consortium for 37 of the country’s leading hotels.

“The luxury hotel sector here has seen six record seasons in a row, based on revenue,” he said, adding that occupancy levels had also been exceptionally high. “We have been achieving over 90 per cent. While that’s not unusual for a seasonal hotel in St Moritz – where you just open the doors and the people come – it is remarkable for the city hotels.”

Mr Fässler said that as well as delivering high operating returns, the resale values of these hotels were very high.

Arab investors have long been keen to invest in historic European hotels, despite the high cost of purchase and renovation, according to Peter Goddard, who runs the Middle East office of TRI Hospitality, a consulting firm. “They are willing to pay anywhere from US$500,000 (Dh1.8m) to more than two million per room for trophy properties that they consider will yield a reasonable return on investment,” he said. Investment funds would typically look for yields of eight to 12 per cent, said Mr Goddard, while entrepreneurs would look for about 20 per cent, given that they tended to take on higher-risk ventures.

Barwa has already invested in the European luxury hotel segment, having bought the Royal Monceau hotel in Paris last October from the controversial Syrian businessman, Osman Aedi. The hotel, which Barwa co-owns with Alexandre Allard, a French entrepreneur, closed yesterday for a complete revamp, overseen by the renowned designer, Philippe Starck. It is expected to reopen in mid-2009 and will be operated by the Singapore-based Raffles Hotels & Resorts.

Prior to these European ventures, Barwa, which is 45 per cent-owned by Qatari Diar, a division of Qatar Investment Authority, and which operates according to Sharia principles, established Shaza Hotels. Drawing on the operating expertise of the Kempinski hotels group and sharing its sales and marketing platforms, it is backed by a $500m investment vehicle launched by the US-based Guidance Financial Group – which specialises in Sharia-compliant financing.

Based in Dubai, Shaza said when it was launched in spring 2006 that it planned to develop and manage up to 30 properties, mainly in the Middle East, within the next six to eight years.

To date it has announced new-build properties in Cairo and Manama, and a renovation project in Marrakech, all of which it will develop and operate, as well as an operation-only contract in Dubai. Hank Brugeeman, the vice president of Shaza Hotels, said that the company had also acquired a hotel in Geneva, which it would redevelop. He declined to provide further details, and said that “elements of the deal are still in negotiation”.

Earlier this month, Barwa announced the establishment of a new company called Barwa Hotels and Resorts, which will focus on all of the group’s investments in the hotel and tourism sectors.

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