The Abu Dhabi Investment Authority (ADIA), the country's largest sovereign wealth fund, confirms it has taken a minority stake in Hyatt Hotels. ADIA bought 4.757 million or 10.9 per cent of Hyatt's Class A shares, which represents about a 3 per cent stake in the Chicago-based hotel company that is controlled by the Pritzker family.
Hyatt Hotels launched last month an initial public offering (IPO) of 38 million shares priced at US$25 (D91.82h) each, raising about $950 million. The investment comes at a time when the hotel industry worldwide has been hit hard by a downturn in global travel, which has forced hotels to cut rates to attract customers. But Hyatt's public offering attracted substantial interest, with the Government of Singapore Investment Corporation, another sovereign wealth fund, announcing last month that it had bought 6.9 per cent of Hyatt's Class A shares.
Hyatt Hotels manages, franchises, owns and develops Hyatt branded hotels, resorts and residential and holiday ownership properties around the world. As of September 30 of this year, its worldwide lodging portfolio consisted of 415 branded properties, the company says on its website. Although the hotel industry had been under pressure, "the fact that two of the more worldwide important sovereign wealth funds and the most active in the hospitality industry chose Hyatt is not a coincidence", said Arnaud Andrieu, a vice president at the property consultancy CB Richard Ellis Hotels Middle East.
There would be "attractive distressed opportunities and would be able, for the one with enough liquidity on their balance sheet, as Hyatt after their IPO, to start capitalising again in real estate on a long term basis", said Mr Andrieu. He said that although he anticipates further year-on-year declines in revenues and profits next year, this would not be severe as some predict. ADIA is not expected to seek a board seat or more than minority investment in the company.
A Dh1 billion Park Hyatt hotel, which is being developed by Abu Dhabi National Hotels, is under construction on Saadiyat Island in the capital and is expected to open in 2011. There will also be a Hyatt hotel in the new Capital Gate building in Abu Dhabi. @Email:firstname.lastname@example.org