Blackstone looks to emerging markets for investment opportunities

Last year, Blackstone CEO Steve Schwarzmann spotlighted Europe as an attractive destination for the investment of the company’s capital, noting the availability of “good buys” in a high-interest rate environment in which companies need to strategically sell some assets in other to retain others.

Location, location, location

In fact, speaking with Hospitality Investor at IHIF EMEA in April, Blackstone managing director Peter Werhahn stated that in 2023, Europe was the most active region globally for the company in terms of real estate capital deployment, adding that Blackstone, while maintaining focus on its core markets, is also exploring emerging markets in Southeast Europe such as Croatia.

“If you look at emerging trends from a demand perspective, resorts in Southeast Europe have been getting a lot of increased attention recently as a natural extension to the trends we’ve been seeing especially in Spain and Greece for a while now, and we’re starting to analyse these more closely. For us to enter into a market, we always need to identify the right opportunity,” he said.

Turning to the popular Mediterranean region, Werhahn says Blackstone has its eyes peeled and ears to the ground. The region has seen significant institutional investment in the past few years, particularly in resort segment, with GIC and ADIA getting involved. In 2023, the Abu Dhabi Investment Authority (ADIA) completed a deal to buy two hotel portfolios in Spain in a joint venture with Meliá Hotels International, closing on the acquisition of 51 per cent interest of seven hotels valued at around €300 million in a JV with Melia as well as 100 per cent of a 17-hotel Spanish portfolio valued at €700 million.

In the same year, Singaporean wealth fund GIC inked a deal to expand its hospitality holdings in the Mediterranean, partnering with Blackstone and securing a 35% stake in Spain’s Hotel Investment Partner (HIP) - with Blackstone to retain control of the rest - in a deal which valued HIP at more than €4 billion.

And Blackstone remains open to even more partnerships moving forward.

“We think there’s lots of runway to go and so we’re actively looking at new opportunities to partner with owners, purchase properties, and then invest into the assets,” Werhahn says.

He adds: “We also constantly look at our own portfolio to see where we can do things differently and continue to improve. The entire market is going to continue to be institutionalised and I think we're going to be a big part of that.”

Blackstone’s interest in these markets indicate a continued confidence in the European hospitality sector following its semi-recent entry into markets including Greece which it entered into in 2019 with the €178.6 million acquisition of five hotel business from the Louis Group, Portugal and Italy.

“We're definitely seeing continued operational strength, especially in key markets where we have significant exposure such as the Canary or Balearic Islands, the Iberian Peninsula, Italy or Greece. Leisure remains a key investment theme for Blackstone and the start of the year has been quite encouraging for most resort properties,” Werhahn added.

Extended stay

Blackstone has also been a dominant player in the extended stay segment, particularly in the United States. And with the recent increasing conversation around extended stay, particularly post-Covid, Blackstone is doubling down.

“We've been very positive on extended stay for a long time, and between Extended Stay America and subsequent acquisitions in the space, we’ve been reasonably active" says Werhahn.

He highlights the operational efficiencies that come with longer-duration stays, which are appealing from an investment standpoint, noting “the longer duration of stay means that you can operate these assets in a more cost-efficient way.”

He adds: “Of course, there are differences in the US versus Europe in the way this looks like, but the product certainly resonates.”

Bourne Leisure

Blackstone also remains confident on domestic holidays in the UK. Since acquiring Bourne Leisure in 2021, Blackstone has invested almost £500 million across its holiday parks and hotels and plans to continue growing the portfolio. Werhahn notes that of the £500 million invested into Bourne Leisure, £120 million has gone specifically to Warner, its adult-only hotel chain. In 2023, Warner Leisure purchased 180-room Runnymede on Thames Hotel & Spa and in 2023, purchased Dalmahoy Hotel and Country Club near Edinburgh and the Forest of Arden Country Club near Birmingham, with Werhahn hinting there may be more to come.

“We acquired the Runnymede on Thames, a landmark property near Windsor, in 2022 and two additional strategic assets in Edinburgh and Birmingham in 2023, and we have a very attractive growth profile for the business set out through these three acquisitions. We've been investing a lot into the existing estate and we're trying to know find new ways to expand the portfolio,” he says.

Looking ahead, Blackstone remains confident on the European hospitality sector and is poised for further growth, maintaining a strategic focus on both emerging and established markets.