London and Regional, the privately held global investment firm, has unveiled plans to bring its four verticals – hotels, commercial real estate, private credit, and ventures – into a unified platform, L+R.
As part of this transformation, L+R has launched Iconic Hotels & Resorts, created through the merger of Iconic Luxury Hotels and L+R Hotels, its former hospitality arm. Iconic will serve as L+R’s dedicated, fully integrated operating platform, responsible for supporting acquisition due diligence and underwriting, platform creation and managing and enhancing the value of L+R’s owned global hotel portfolio. Iconic Luxury Hotels already operates across five countries, with numerous landmark urban hotels and resorts including Excelsior Venice Lido, Nobu Portman Square in London, Palm House in Palm Beach and Cliveden House in Maidenhead.
Says Cody Bradshaw, CEO of L+R: “The launch of our new, central London-based, Iconic Hotels & Resorts following a remarkable year of transformation and investment in our new HQ, people, systems, and strategies, represents the start of an ambitious new chapter as we look to create the leading global owner-operator and go-to partner for major investors.”
Bradshaw joined the firm as chief executive of the hotels business a year ago with a mandate to “create a vertical investment group with a unique operating platform”. He says: “In the last 12 months, we have already executed on a three-year strategic plan. We are likely to reach year five targets within the second year – the corporate transformation of the business has been phenomenal.”
Sector disruptors
Founded by brothers Ian and Richard Livingstone, L+R owns £10 billion+ in real estate and vaunts a more-than 30-year track record of success. The organisational shift will enable the firm to further establish itself as a uniquely positioned sector specialist and disrupt the traditional GP/operating partner model, Bradshaw says. “We can offer prospective capital partners a vertically integrated operating platform underpinned by unmatched alignment of interest via L+R’s unique willingness and ability to invest significant equity, well in excess of industry standard GP/operating partner norms, alongside our partners in scalable, thematic investment strategies,” he says.
He notes that assembling a talented team has been central to driving the evolution of one of the UK’s most formidable family offices. “We are fortunate that L+R owns one of the largest office buildings in the West End, and we have assembled a 100-strong team on one floor to manage hotel operations,” he says. This includes in-house experts across commercial, operations, F&B, IT, and HR “along with an expansive, new in-house interior design studio and project management division, all under one roof in the heart of central London”. All this is backed by “a significant pool of discretionary capital”, he notes, allowing the investment teams to pursue opportunistic strategies.
New appointments include Shan Kanagasingham as chief operating officer of Iconic Hotels & Resorts, with a mandate to oversee operations across the global platform, including the implementation of guest-experience and value-creation strategies. Kanagasingham most recently spearheaded the expansion of the US-headquartered Auberge Resorts Collection. “It’s all about the people,” Bradshaw says. “One of the best parts about hiring great talents is that they attract other great talent – the business grows organically.”
Industry trends
L+R’s hospitality portfolio has typically ranged from budget to luxury offerings, and Bradshaw continues to see the virtues in a polarised strategy focusing on “the two ends of the barbell”. He says: “Select service has been performing incredibly well, with high occupancies and an efficient operating model. At the other end of the spectrum, leisure has been the real winner post Covid, and although we are seeing leisure demand normalise, ultra luxury continues to break record after record.” Properties in the middle are at risk “of extinction, like dinosaurs”, he warns. “Pent up, delayed maintenance, oversized facilities, rising wages, taxes, and regulatory costs are all weighing on midscale.” However, he anticipates “some reinvention” here too, citing the case of smart hostel operators who think about rooms in three dimensions that have been able to transform failed properties in this segment.
The last 12 months has seen L+R look to deepen growth through thematic partnerships, for example with the launch of LR Midstar Holdings, a Nordic hotel investment platform targeting Sweden, Denmark, Norway and Finland. Elsewhere, its European core+ investment vehicle, LRO Hospitality, a JV with Dutch pension fund PGGM, has remained active with additional major acquisitions, including the Marriott Brussels Grand Place. Bradshaw says that he sees this model as “a blueprint” rather than one-offs. “I think that this is the key opportunity in having an investment and operating platform of this size,” he says. “When you reach a certain scale, the natural evolution for a more effective growth strategy is to consider more external partnerships. Midstar is an example both of a strong capital partner in L+R and an experienced, local expert, which you might need in a geography like the Nordics. But L+R can equally leverage our own experience and presence to be the local partner for other investors, such as PGGM, in the UK or parts of Continental Europe, or indeed in the US.”
Facing challenges
While the firm remains committed to hospitality, Bradshaw is fully aware of the challenges facing the industry. “I think the main theme is that we are in unchartered territories with systemic risks throughout the world,” he says, citing the related financial risks of the artificial intelligence (AI) boom and listed tech firms, as well as geopolitical uncertainties. “Everyone asks why leisure travel is resilient in an uncertain world. One of the obvious reasons is the recent stock market boom, which has created a lot of unexpected disposable income for all levels of earners.” But the tech-heavy concentration of the S&P 500, for example, also means a risk of that bubble bursting, with an impact on US consumers. “If you are looking at the international travel habits of North Americans, you have to be a bit cautious,” he says. “Some of those demand trends might be reliant on record equity performance. The top 10 percent of US earners account for 50 percent of all US consumer spending; they own 90 percent of US stocks and make up two thirds of outbound travel.”
On the flip side, he points to an expanding global audience of hospitality consumers which is driving industry optimism around emerging markets. “We are already seeing looser Visa rules being implemented for Indian travellers,” he says, quoting research that suggests that the country will be responsible for 80 million travellers by the next decade, with Indians forecast to become the globe’s fourth largest spenders overseas. This in turn should have a phenomenally positive impact on key destinations for international travel in Europe, or key US cities, he suggests. “Although some normal levels of correction tied to broader economic events are likely, there are compelling long-term demand fundamentals connected to the world’s growing middle class,” he says. “Not to mention the worldwide growth in airlift and seat capacity, which has been revolutionising hospitality for the past two decades.”