Malmaison and Hotel du Vin change hands in £363m deal

Ken McCulloch. Picture: Donald MacLeod

Ken McCulloch. Picture: Donald MacLeod

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THE Malmaison boutique hotel chain which began life in Scotland has changed hands again as part of a £363 million deal which will see an Asian hotel group significantly boost its European presence.

Frasers Hospitality UK Holdings, a subsidiary of Singapore-based property company Frasers Centrepoint Limited (FCL), has bought the Malmaison Hotel du Vin group of hotels from US venture capital firm KSL Capital Partners which had only acquired the business just over two years ago.

Malmaison, founded by Scots-born hotel guru Ken McCulloch, operates sites in Aberdeen, Dundee, Glasgow and Edinburgh, and Hotel du Vin has bases in Edinburgh, Glasgow and St Andrews.

The acquisition doubles the number of Frasers Hospitality rooms in Europe to about 4,000 and expands the company’s portfolio to 129 properties in 77 cities with 21,100 rooms.

Both Malmaison and Hotel du Vin, with 2,082 rooms between them, achieved average occupancies of more than 80 per cent for the last three years.

Frasers Hospitality chief executive Choe Peng Sum said: “The purchase of Malmaison and Hotel du Vin perfectly complements our brand portfolio and gives Frasers Hospitality a platform to expand into the fastest growing hospitality sector. We look forward to building on this success with future development in the UK, Europe and Asia.

“With these two best-in-class lifestyle brands, we are on track to reach our goal of operating 30,000 rooms by 2019.”

Frasers’ global interests include a number of serviced apartments in Edinburgh.

Lim Ee Seng, chief executive of FCL Group, said: “FCL’s strategy remains focused on achieving balanced growth across asset classes and diversifying our earnings profile.

“This acquisition is important as it doubles our offering in Europe and propels Frasers Hospitality to be one of the leading hospitality players in this market.”

KSL had paid an estimated £180m for the business two years ago and said at the time of the acquisition that it planned significant investment in the chains.

It had bought the business after former parent company MWB Group Holdings fell into administration under the weight of its huge debt pile.

The company had been a stock market darling before the credit crunch hit but built up debts of more than £200m. MWB was set up by Richard Balfour-Lynn in 1994 as a serviced office and property investment company and had acquired an 82 per cent stake in Malmaison in 2001.

The Malmaison chain was originally the creation of McCulloch. He opened his first Malmaison in Leith in 1994 in collaboration with Surrey-based hotel business Arcadian International. A second hotel opened in Glasgow a month later.

Patriot Hospitality America, which owns the Wyndham and Grand Heritage hotel names, had bought Arcadian in 1998 in a deal under which McCulloch is understood to have received more than £37m for his stake in the Malmaison joint venture.

McCulloch had begun his career as an apprentice at British Transport Hotels in 1964, and went on to create a number of bars and restaurants, including One Devonshire Gardens in Glasgow. He later set up the Dakota hotel brand with David Coulthard.

Hotel du Vin had been founded in Winchester in 1994 by sommelier Gerard Basset and hotel manager Robin Hutson.

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