IHG Rumored To Be In Talks to Acquire Belmond

We’ve seen a lot of consolidation in the hotel industry in the past few years. Marriott has taken over Starwood, IHG has taken over Kimpton, and Accor has taken over Fairmont, Raffles, And Swissôtel. While it sounds like this isn’t anywhere close to being finalized (and may not happen), The Times ran an interesting story this week about a potential acquisition for IHG. While the story is primarily about a short term drop in IHG’s stock due to the company not paying dividends to shareholders, there’s an interesting rumor in there as well:

There were strong rumours yesterday that Mr Barr had held recent preliminary discussions with Belmond, the New York-listed luxury hotel and train operator formerly known as Orient-Express Hotels, although his insistence at last week’s results that any target would have to be a “small, asset-light” brand makes a deal unlikely — unless he can do a back-to-back sale of Belmond’s assets.

For those of you not familiar with Belmond, up until 2014 it was known as Orient-Express, though they rebranded at that point (and there’s an interesting backstory to the rebranding).

Belmond has 49 hotels, trains, and river cruises, in 24 countries, so the brand goes beyond hotels (and is perhaps originally most well known for the Orient-Express train). It’s certainly a luxury brand, with some of their properties being world class, though not all properties are of the same caliber (which is true of most brands).


Belmond is known for their train journeys

This would be an interesting acquisition for IHG. Historically IHG has been strongest in the limited service and budget market, with Holiday Inn and Holiday Inn Express. Their flagship properties are their InterContinentals, though those properties are also of varying quality, and I wouldn’t exactly call InterContinental a true luxury brand (actually, I’m not sure what I’d consider InterContinental to be, as I find they have a bit of an identity crisis). They also recently acquired Kimpton, which is upscale, but not luxury.

So while InterContinental has a few great hotels, adding Belmond would be their first entry into the luxury market.

As noted above, there’s one major issue, though — IHG has an asset-light strategy, and in a vast majority of cases they don’t own their hotels, but rather just have management contracts for them. In the case of Belmond, they own most of their hotels, so it would be an expensive acquisition, and would be different than IHG’s current strategy. Presumably they could buy Belmond and then sell the hotels off and just manage them, but that would get complicated.

Oh, and also purely speculation on my part, but something tells me that if this were to happen, you won’t be able to redeem 70,000 points or an IHG free night certificate for a night at a Belmond hotel, train, or ship. 😉


Hotel Cipriani, a Belmond Hotel

What do you think — would Belmond be a good fit for IHG?

(Tip of the hat to Hans Mast)

Comments

  1. I have been to 2 Belomnd hotels – Charleston Place and the Monasterio. Charleston Place was nice, but its style, architecture, finishes, etc., do not belong in Charleston. The Monasterio was absolutely fantastic. I am not counting on 70,000 points per stay there, but I would be ecstatic if I could.

  2. Haha even 100.000 IHG points wont get you to some of their Italian properties,huess at the start they will do like kimpton ,no earning no redemption.

  3. I’d love to redeem IHG free nights at Cap Juluca, Anguilla, after their renovations are finished this fall!

  4. The Belmond portfolio is very complicated; personally, I love some of their properties and loathe some of the others. In the 80’s and 90’s I loved their trains, now I fear it would be a bottomless pit to invest in them. Only a few weeks ago I joked to hotel people that IHG would probably make a bid for Belmond (for lack of other groups to buy) but I would consider it a huge mistake on their part to buy the entire group. It will be very complicated and time consuming to sell unwanted properties after ~ no doubt ~ having overpaid for the “fixer upper” patchwork lot. Why not start a new luxury brand with all that money? Something fresh, innovative and attractive to Millennials (and folk like me who in the last 40 years spent 250+ days a year in 5 star hotels around the world). It would be quicker, cheaper and a new name should project an image of consistent quality without all the baggage associated to the Orient Express and Belmond names. And give some forward thinking young architects and decorators a chance!

  5. @Lucky, you forgot to mention that Accor also bought Banyan Tree/Angsana recently too. I’m curious which Belmond properties you consider world-class and those that aren’t. We’ve come close to booking at Belmond properties twice (Governor’s Residence in Yangon and Mount Nelson in Cape Town) but ultimately opted for other hotels. We’re trying four of Belmond’s hotels in Peru on an upcoming trip though so am curious how they measure up. On a separate note, I’ve always placed Intercontinentals in the “Premium” or 4.5-star category. Not true luxury like Four Seasons or Raffles, but a step up from the 4-star business hotels like Marriott or Hilton. I agree that IHG is overdue to have a true-luxury brand

  6. Let’s hope not! I have been on the Orient Express three times, and all three times were such wonderful experiences. It would be a shame to have the good brand name of Belmond tarnished by that of IHG, which (no offense) only does hotels for less-fortunate travelers and businesspeople.

  7. Ewwww, I hope I make it to the Belmond in Cusco before this happens. These non luxury brands always dumb down luxury brands they acquire (see Ritz Carlton and St Regis).

  8. My guess is that IH would wreck Belmond properties. Mixing mass market/lower tier managed properties with upper tier/owned properties would be a huge challenge.

  9. And their Belmond LaSamanna property in St. Martin was hit hard by Hurricanes Irma and Jose. Still closed I believe.

  10. Are you considering the hotel at Machu Picchu to be one of the less-than-stellar Belmonds? From what I’ve read the hotel itself is only so-so (tiny rooms that aren’t super luxurious, being completely reliant on the state run busses to get up and down the mountain which essentially strands you up there once Machu Picchu closes and also subjects you to hour+ waits upon arrival and departure based on when your train gets to town, mediocre and overpriced food) and its extremely overpriced compared to the actual 5 star hotels down the mountain (they charge upwards of $1000 per night). That said, it seems like you are paying exclusively for the convenience and there isn’t that much Belmond can do to improve the physical layout of the property or the weird transit issues since the government of Peru won’t let them do major constructions or provide private transportation up and down the mountain.

    It seems like Belmond does their best given the limitations and it makes sense for them to operate their hotel as part of their fairly extensive Peru portfolio with some of the top hotels in Lima and Cusco and luxury trains operating from Cusco to Machu Picchu as well.

  11. This is very interesting. On the surface I can see some of the attraction – IHG does need a true luxury brand – but I am not convinced the Belmond brand is “recognised” enough to provide that luxury platform, and their hotels and trains tend to be known as individual luxury properties rather than a consistent chain like Four Seasons.

    I also doubt IHG would do well managing these unique (generally) top-tier and experience-based properties. As you point out, they cannot even really identify what they want Intercontinental to be as a chain. I also feel Intercontinental used to be a far more premium brand in past decades than it is now – it’s gone downhill, right?

  12. I think Accor is an interesting case study for IHG. Both Accor and IHG are large hotel groups centred around large numbers of mid-budget tier properties and a flagship premium (but not luxury) property – in Accor’s case Sofitel, in IHG’s case InterContinental. Both were notably lacking any luxury brands as compared to their main global competitors like Hilton, Marriott/Starwood and Hyatt. Accor has aggressively remedied that recently by buying up Fairmont-Raffles and Banyan Tree. In the process they’ve gotten a decent portfolio of premium hotels under the Fairmont banner and some true luxury properties from Raffles and Banyan Tree. For IHG, I think Belmond is not the complete solution but a step in the right direction. Ideally, IHG buying up a more prominent and “consistent” brand like Mandarin Oriental, Shangri-La, Peninsula, Four Seasons, or even Kempinski would be preferred, but you’ve got to start somewhere.

  13. IHG unfortunately lack expertise in running luxury hotels as this was never their core business and have been playing in this for years. For years they were advised by their Advisory Boards that they need to sort the InterContinental Brand out as it is inconsistent and have some hotels like Danang which are excellent but these halo hotels suffer due to the big box hotels in the brand that are not up to the same standard. Renovation needs to be done in many. Belmond would suffer especially with cost cutting and lack of knowledge/ expertise in the luxury segment especially from the sales personnel side which is now non existent on IHG’s side due to cost cutting and restructuring which they are going through and gone through in 2017

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