Raffles sells out to Colony Capital as brand eyes international expansion

The news last month that the iconic Raffles Hotel in Singapore has come under the hammer will have most certainly sent shock waves out across the luxury hotel sector.

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By  Sarah Campbell Published  July 27, 2005

The news last month that the iconic Raffles Hotel in Singapore has come under the hammer will have most certainly sent shock waves out across the luxury hotel sector. Raffles Holding, owner of the famous hotel, has agreed to sell all 41 of its properties to US investment firm Colony Capital for US $1 billion. The deal includes all hotels and resorts around the world marketed under the Raffles and Swissotel brand names, including the Raffles Dubai, currently under construction in Wafi City. Earlier this year, Raffles Hotels & Resorts signed a management contract for its first hotel in the Middle East, the Raffles Dubai. This contract will be unaffected by the transaction, according to Diana Ee Tan, senior vice president, marketing, and interim managing director, Raffles Hotels & Resorts. “The opening will not be affected in any way. Raffles Dubai is a management contract and this transaction does not change the management agreement we have with the owners of Raffles Dubai. Our technical services team is currently working diligently with the owners of the hotel towards the opening of the hotel by 2007,” EeTan told Hotelier Middle East. Raffles Hotels & Resorts will maintain management contracts for all 41 properties, and Raffles chief executive, Jennie Chua, will remain at the helm. According to Chua, the decision to sell Raffles Hotels was based on the fact that Raffles Holdings did not have the capital needed to expand the brand. The hotel business is currently ranked 18th in the world, and Colony Capital has already stated that it intends to invest in expanding the brand, to make Raffles a global hotel chain. “It is our understanding that Colony sees opportunities for expansion in several markets, especially those where our Raffles and Swissotel brands are currently under-represented, such as China, Japan, Korea, Australia and also the US markets,” Ee Tan revealed. “China is a market with strong growth potential and, presently, we only have hotels in Beijing and Shanghai, so there are opportunities there. There has also been a high level of interest from luxury resort owners to have our Raffles brand on their resorts, so this would be an area for expansion.” Colony Capital has pledged that the portfolio will remain under the Raffles flag, and that it will keep Raffles staff employed in all their current positions. The transaction with Colony is subject to approval by shareholders. Raffles anticipates that the completion of the transaction will take place by the end of the year.

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