Bloomberg News

New York’s Carlyle Hotel Sold to Hong Kong Billionaire Cheng

July 29, 2011

July 30 (Bloomberg) -- The family of Hong Kong billionaire Cheng Yu-tung bought five luxury hotels, including Manhattan’s Carlyle, from Maritz, Wolff & Co. and Rosewood Corp. for about $570 million.

The transaction includes Maritz Wolff’s Rosewood Inn of the Anasazi in Santa Fe, New Mexico, and Rosewood Little Dix Bay in the British Virgin Islands. The other hotels in the deal are Rosewood Corp.’s Rosewood Crescent Hotel in Dallas, and Rosewood Mansion on Turtle Creek, also in Dallas and co-owned by the two sellers, Philip “Flip” Maritz, co-founder of Maritz Wolff, said in a telephone interview.

A unit of New World Development Co., controlled by the Cheng family, agreed last month to buy luxury hotelier Rosewood Hotels & Resorts for $229.5 million from Maritz Wolff and Rosewood Corp., a Dallas-based firm that manages 19 properties including the Carlyle and Rosewood Mansion on Turtle Creek.

New World Development plans to expand its international luxury hospitality presence, the company said when the earlier deal was announced. Maritz Wolff -- founded by Flip Maritz and Lew Wolff, co-owner of the Oakland Athletics baseball team -- is taking advantage of investor interest in the recovering lodging sector, the founders said in April.

Chinese investors are looking to invest in high-end hotels in large U.S. cities in anticipation of an influx of travelers from Asia, according to Alan Reay, president of Atlas Hospitality Group in Irvine, California.

China’s Middle Class

“It is driven by the combination of the strength of the Chinese economy and the relative strength of their currency to the dollar,” Reay said in a telephone interview. “They obviously see the travel industry as a growth industry, especially with the growing middle class in China, which is increasingly traveling to other parts of the world.”

Luxury hotels are of particular interest because high-end lodging has had the biggest recovery after the financial-market crash in late 2008, he said.

“This deal demonstrates the advantage for Asian investors willing to use their relatively lower cost of capital and longer-term investment horizon to acquire strategic investments here in the U.S.,” Flip Maritz said in a telephone interview. “This is one of the first truly strategic investments by a company from that region in a hotel brand with worldwide ambitions.”

Hotel sales in the Americas may rise as much as 25 percent this year to $13 billion, buoyed by foreign investors and real estate investment trusts seeking to deploy cash, brokerage Jones Lang LaSalle Hotels said in January.

Rising Revenue

Revenue per available room, an industry measure of occupancy and rate, at hotels with the priciest rooms rose 13 percent to $171.56 in the first quarter, according to Hendersonville, Tennessee-based Smith Travel Research Inc. That was the biggest increase from a year earlier among seven hotel segments.

Cash flow at the 188-room Carlyle never dropped below $10 million annually during the recession, according to Flip Maritz. The hotel has views of the Manhattan skyline, “fine antiques” in many rooms and “lush velour terry child-sized” bath robes and slippers for its younger clients, according to its website.

The Inn of the Anasazi in downtown Santa Fe is a 58-room boutique hotel with hand-carved doors, sculptured stairways and sandstone walls. Little Dix Bay, a luxury resort on Virgin Gorda in the Caribbean, features ocean-view dining, outdoor showers and complimentary tennis clinics, according to the hotel’s website.

Selling Hotels

Maritz Wolff, based in Los Angeles and founded in 1994, is now down to stakes in four properties from almost 50 a decade ago. The firm is planning to return $500 million to investors over the next four years, it said in April.

“The successful sale of the Carlyle showcases the reputation and investment success that Flip and I have achieved over the past decade and a half,” Wolff said in an e-mail.

The company said on June 14 that it’s putting up for sale its Fairmont San Francisco hotel, a 591-room luxury property in the city’s Nob Hill neighborhood. Maritz Wolff co-owns the hotel with Saudi billionaire Prince Alwaleed bin Talal.

U.S. hotel prices peaked at about $153,000 per room in 2006 then plunged 36 percent to a low two years ago, according to New York-based research company Real Capital Analytics Inc. The average price climbed to $192,479 a room in the second quarter, helped by a surge in luxury-hotel transactions.

--Editors: Daniel Taub, Larry Edelman

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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