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The race towards luxury continues at IHG with the acquisition of uber lux resort and spa brand, Six Senses. Remember, IHG acquired Regent last year and will renovate and rebrand their flagship Intercontinental Hong Kong to its former glory, and branding, The Regent Hong Kong, come 2021. Don’t forget, that integration now allows guests to earn and redeem points at their entire stead of properties. Until today, Regent would have stood at the top of IHG’s branding…not now.
If you’re unfamiliar with Six Senses, you’re probably not alone: their resorts are seriously expensive. So expensive, that most people would never consider staying at them. We’re talking 4 figures a night, competing with the likes of Aman/Peninsula/Oetker, and are responsible for many late nights of insta-drooling over here at monkey miles.
In fact, Travel and Leisure readers ranked them the #1 brand in the world. They are fantastically epic places to dream about staying, and now that IHG is acquiring them…perhaps some incredible point redemptions are soo to arise? 🙂
A bit of history.
Six Senses was founded by Sonu Shivdasani, Ceo and Founder of Soneva ( think uber posh Maldives resorts ) and in 2012 he sold the brand to Pegasus Capital for an undisclosed amount. Since then, Pegasus has been actively expanding the group throughout Europe, Asia, the Middle East, and their first US property in West Chelsea NYC is already under construction.
Flash forward and IHG has agreed to pay Pegasus a whopping $300 million in cash for Six Senses’ current 16 hotels under management and another 18 management contracts in the pipeline. The hope is to have a further 50 hotels developed in the future.
- IHG has agreed to acquire Six Senses Hotels Resorts Spas and its management business for $300 million in cash.
- Six Senses is an asset-light business. It manages 16 hotels and resorts (1,347 rooms), and there are a further 18 management contracts signed into its development pipeline. The open hotels include two properties for the upscale resort brand, Evason. With a further 50 deals under active discussion, IHG expects to accelerate Six Senses’ growth globally to more than 60 hotels over the next 10 years.
- The acquisition includes the entirety of Six Senses’ brands and operating companies and does not include any real estate assets. It includes Six Senses’ spa operations, which are core to the brand’s luxury and wellness positioning. Six Senses operates 37 spas in total under the Six Senses and LivNordic brand names, and also provides spa consultancy services. The Six Senses management will remain in place.
- Six Senses currently generates fee revenues of more than $13 million. The acquisition is expected to be EBITDA breakeven in year two and to generate a return approximately equal to its cost of capital by year four.
- For tax purposes, the transaction constitutes an asset sale for the purchaser, and as such IHG will be entitled to amortise the assets acquired. It is anticipated that the relief associated with this amortisation will reduce IHG’s future cash taxes by approximately $75 million.
IHG has squarely aimed at eroding Marriott’s leverage on the luxury market
In the past few years we’ve seen IHG reorganize their internal brand hierarchy. Intercontinental definitely doesn’t sit at the top of the totem pole after Kimpton, Regent, and Six Senses joined the herd. In fact, the Six Senses acquisition not only dethrones Regent’s brief reign, but represents a shot across Marriott’s bow.
Why Marriott specifically?
Aside from Wyndam and Choice, which have very super small luxury footprints, the 3 largest worldwide chains are: Marriott with 5900 hotels, IHG with 5000, and Hilton with 4700. While Hilton has come great properties like Conrad Bora Bora and the newly minted HH category of 125k a night Waldorf Maldives, it falls short on super high end luxurious experience hotels like Marriott does. Think St Regis, Ritz Reserve, many of the unique Luxury Collection properties (ex: Gritti Palace Venice). 4 figure a night base room spots.
The Marriott/SPG merger created an incredible opportunity for high volume business travelers to pin their work stays to Marriott in the hopes of redeeming their hard earned points at insanely aspirational properties like the St Regis Maldives, etc.
Prior to Six Senses, IHG could entice you with properties like the Intercontinental Bora Bora, but across the brand, Intercontinental just doesn’t compete at the uber high end market. Now…they’re a major player.
In fact, IHG is pulling together a group of brands that aim squarely at eroding Marriott’s luxury hotel market: ( St Regis, Edition, Luxury Collection, Autograph Collection, JW, Ritz Carlton, Ritz Reserve) with Kimpton, Regent, and Six Senses.
- Six Senses ——————–> Ritz Reserve, Edition, St Regis
- Regent ————————> Ritz Carlton, Luxury Collection ( maybe St Regis in certain locales, i.e. Hong Kong )
- Kimpton/Intercontinental–> Ritz, JW Marriott, Autograph Collection
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Who knows if points will be redeemable at Six Senses
There is a big part of me that believes it will happen if for no other reason than all the other big brands allow redemptions at aspirational properties ( barring Ritz Reserve or properties that have specifically opted out). If that’s the case, the properties would surely start at 70k in the near-term, but more than likely warrant a higher category to be created…much like Hyatt did with a cat 8 for their SLH partnership.
Point redemptions would have me singing supercalifragilisticexpialidocious… I mean…Six Senses is insane, and IHG points can be acquired not only through stays, but also credit cards, promotions, and point sales.
It would also make the IHG Premier one of the most valuable cards on the market. Can you imagine a 4th night free at either of those two properties above? #yes
Regardless…this is a very cool brand to be a part of IHG, and hopefully results in some glorious award stays in the future.
*feature image courtesy of IHG/Six Senses
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