Spanish newspaper Cinco Dias recently reported that the investment giant has appointed advisors to look into either selling its 65 percent stake in HIP or taking the investment platform public.
HIP’s portfolio, which spans Spain, Portugal, Italy and Greece, today comprises 73 hotels with some 22,000 keys. Blackstone acquired HIP from Banco Sabadell in 2017, when it held just 14 seafront hotels in Spain with around 3,700 rooms. At the time of acquisition, Blackstone’s head of real estate Europe Anthony Myers flagged the “substantial investment” the firm was making and predicted that it would grow HIP “into Spain’s premier hospitality business”.
Blackstone has certainly done some deals to quintuple its holdings and expand across key Mediterranean markets. Today, HIP is valued at €6.5 billion after a prescient push into Italy, initially via the purchase of a portfolio of six hotels in Sardinia and Sicily operated by the Mangia family. It also tapped up the Greek market, with its latest deals there in November of last year bringing its hotels in Greece to ten, located on the islands of Corfu, Crete, Zante, Rhodes, the Halkidiki peninsula and Athens. Furthermore, the private equity giant brought sovereign wealth fund GIC on board in October 2023, offloading a 35 percent stake to the Singaporean fund in a deal that valued HIP at €4 billion.
Yet while sources close to the matter indicate that Blackstone is targeting a transaction within 2025, not all experts are betting on a classic private equity exit. Indeed, listing HIP would be far more in keeping with Blackstone’s more recent strategy shifts.
Audacious play
Just last year, at the NYU International Hospitality Industry Investment Conference in New York, Blackstone’s president and chief operating officer Jon Gray told delegates that “if you own a good business, you should just stick with it”, referencing Blackstone’s audacious play for Hilton and subsequent success on the public markets.
Gray recounted how one of his earliest – and biggest – lessons in the hospitality industry had been Blackstone’s acquisition of Hilton on the eve of the global financial crisis (GFC).
Blackstone famously took Hilton Worldwide (then Hilton Hotels Corporation) private in an all-cash leveraged buyout deal worth $26 billion, of which $20.5 billion was debt, in July 2007. Just over a year later, the highly leveraged Lehman Brothers collapsed, dragging down Wall Street with it.
Said Gray: “In the 18 months after the deal, things went really badly. Earnings were down, RevPAR plummeted. By March 2009, we were massively overleveraged and had written the company down by 71 per cent.”
Yet Blackstone ended up investing another $800 million in the company and eventually turned a corner. In late December 2013, the firm took Hilton public with a valuation some $7 billion higher than its original buy-out fee. It began to wind down its investment beginning in June 2014 and sold its final stake in 2018.
Concluded Gray: “We ended up making money on our investment. We had an amazing leader in Chris and a wonderful company. Our biggest error was probably selling our shares – we should have stuck with it.” Gray has since spoken of the value of holding businesses to “earn the benefit of compounding”.
Investment goals
Other US investors display signs that they are in European hospitality for the long-term. With a 30-year pedigree in international hotel investment and management, New York headquartered Highgate, which operates out of multiple US offices and has a presence in London, has made a play for several European portfolios in recent years.
In January 2023, a consortium led by funds managed by Davidson Kempner Capital Management, and including Highgate and Kronos, acquired ECS Capital in Portugal for a reported price of €850 million. Highgate took over a tranche of Portuguese hotels to launch HG Portugal, a Highgate-owned management company with plans for further expansion throughout the Iberian nation. This followed two deals in the UK market for Grosvenor House Suites and the Dorsett City London Hotel in London’s Mayfair District, with the latter relaunching as Hotel Saint in 2023 as part of a larger repositioning.
If there was still any doubt about US private investor interest in European markets, 2024’s slate of UK portfolio deals struck by huge private equity firms might put them to rest. These included Starwood Capital inking a £800 million deal with the family-run Radisson Edwardian group for 10 hotels with 2,053 rooms across the country, as well as signing a pledge to team up on further deals. While the transaction took Starwood’s European hotel tally to 47, including some 10,000 rooms across the continent, the group also confirmed its long-term commitment to the region. Commenting at time of acquisition, managing director Tim Abram said: "London is one of the world's most sought-after hotel markets, and this portfolio enables to us gain exposure on a unique scale to London. We plan to invest significant capex during our ownership into further enhancing the hotels.”
Another private equity giant, Ares Real Estate, also struck with a £400 million deal for 18 UK hotels with 3,028 rooms acquired from Landsec. The portfolio is focused on Central London with other assets in Edinburgh, Manchester and Birmingham. Meanwhile, KKR and Baupost pounced on 33 Marriott International hotels in the UK owned by the Abu Dhabi Investment Authority in December.
While news on Blackstone’s HIP ownership is still to emerge, it seems clear that whatever the outcome, US capital – and the significant firepower of private equity funds – is here to stay in Europe. A further twist in the tale might emerge should core US capital re-embrace cross-border deals once again this year.
Richard Everett, managing director, Europe core strategy, CBRE Investment Management sees capital raising activity for major, global core funds showing promising signs as of the first quarter of 2025. He says: “US investors will be key to the global investment picture. If they start to embrace the diversification risk of coming to Europe – there have been very few core investors here in recent years – that will prompt a dramatic change to the landscape.”
By Isobel Lee
