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The historic Raffles Hotel in Singapore, famed for its colonial grandeur and the Singapore Sling cocktail, is to change hands in a deal worth $275 million (£180 million).
The luxury 103-room hotel, a favourite watering hole of literary figures including Somerset Maugham and Rudyard Kipling, looks set to be acquired from Fairmont Raffles Hotels International by Qatari Diar, part of the state-controlled sovereign wealth fund, the Qatar Investment Authority.
Talks over a deal come a year after The Times reported that Prince Alwaleed Bin Talal, the Saudi billionaire who controls Fairmont Raffles, had secretly put the 123-year-old hotel up for sale with an asking price of more than $350 million — a story that was later denied by the Prince’s Kingdom Holding Company.
News of a possible sale of Raffles comes hot on the heels of the purchase this week by Qatari Diar of a 40 per cent stake in Fairmont Raffles itself, a deal that reduces Kingdom’s stake from 58 per cent to 35 per cent. Colony Capital, the American property and private equity investor, is cutting its holding to 22 per cent.
The $847 million headline price comprises $467 million for a 40 per cent stake, another $105 million in the form of hotel management contracts that Qatari Diar will award to Fairmont Raffles on a number of other hotels it owns, plus $275 million for an unnamed hotel property.
Both Fairmont Raffles and Kingdom have confirmed that a sale of the Raffles Hotel is under discussion, although The Times understands that the Qataris are still trying to quantify the amount of money required to refurbish the hotel and revamp the adjacent retail and leisure facilities. The project, including the addition of another 78 guest rooms, is tipped to cost as much as $100 million.
The terms of the proposed sale include a long-term management contract that would allow Fairmont Raffles to continue to run the Singaporean landmark for the foreseeable future.
Qatari Diar’s existing property portfolio includes Le Royal Monceau in Paris, which is set to reopen under the Raffles brand this year after the completion of a redevelopment as a luxury 152-room hotel with interiors by Philippe Starck, the avant-garde designer.
Fairmont Raffles, created from the merger four years ago of the Fairmont and Raffles groups, runs more than 100 hotels, some under the Swissôtel chain, and is planning to seek a public listing in the next two or three years. Its Fairmont-branded portfolio includes The Savoy, in London, which is due to reopen in the next few months after the completion of a long-delayed refurbishment.
Like many of its rivals, the company has been focusing increasingly on management contracts rather than asset ownership. Since the merger of Fairmont and Raffles, it has completed so-called sale and manage-back deals on hotels including the Fairmont Banff Springs, in the Rocky Mountains. Its remaining assets include the Fairmont Hotel Vier Jahreszeiten in Hamburg and the Fairmont Copley Plaza in Boston.
The Raffles Hotel, founded in 1887 by the four Sarkies brothers from Armenia as a ten-room bungalow, is reputedly where the last surviving tiger in Singapore was shot in 1902.
The list of former guests includes Noël Coward, Charlie Chaplin, Elizabeth Taylor, Anthony Burgess and, in more recent times, the Queen, Michael Jackson and Beyoncé Knowles.http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article7091016.ece