In a move which further underscored Blackstone’s confidence in the UK hotel sector, the company late last month acquired the Village Hotels chain from KSL Capital Partners, further expanding its hospitality investment in the country. The deal followed reports in 2023 that KSL was seeking a buyer, with the private equity company initiating an auction process in February this year with a starting price of £800 million.
Blackstone has remained positive on domestic holidays in the UK. Since acquiring Bourne Leisure in 2021, it has continued to invest heavily in holiday parks and hotels, spending almost £500 million on Bourne Leisure, and has expressed plans to continue growing its portfolio.
Speaking exclusively with Hospitality Investor, Blackstone managing director Peter Werhahn discussed the rationale behind the acquisition of Village Hotels which currently boasts a portfolio of 33 hotels across the UK as well as the company’s future plans for the hotel chain.
Hospitality Investor: What motivated Blackstone to acquire Village Hotels from KSL Capital Partners?
Peter Werhahn: Village Hotels has a really unique positioning in the UK leisure sector. This is a great business that offers an “everything under one roof” experience, integrating accommodation, fitness clubs, food and beverage outlets and co-working spaces within each property. Thanks to its standout value proposition, Village has cultivated a loyal customer base across the country, with more than 1.6 million members and a broad customer base ranging from professionals, families, groups and sports teams, each finding value in its diverse amenities. If you add the strength of Village’s management team led by CEO Gary Davis – who has more than 15 years of experience leading the business – you can see why Village Hotels is a very exciting investment for Blackstone.
HI: How does the acquisition of Village Hotels fit into Blackstone’s overall hospitality strategy?
PW: Our investment into Village Hotels fits very well, as part of our wider conviction in leisure and travel. On the leisure transient side, we are seeing more people spending an increasing share of their disposable income on experiences, such as those that Village provides. For corporates, there is an increasing demand for Village’s “everything under one roof” experience, as it provides superior amenities compared to traditional hotels, and a wonderfully high energy atmosphere, which also makes it particularly appealing for group travel. We think this makes Village a really unique business.
More generally, we like to invest in leading and differentiated companies that are led by exceptional management teams within sectors that demonstrate resilience and long-term growth potential – we’ve seen all these traits at Village. And we remain long-term believers in the UK hospitality sector. Our portfolio currently includes Haven, the largest operator of caravan parks in the UK, and Warner Hotels, the only hotel chain in the country catering exclusively to adults.
HI: What are Blackstone's immediate priorities for Village Hotels post-acquisition?
PW: We will continue to support the management team in carrying out various asset management initiatives, including extensions of and investments into rooms, gym and F&B spaces at existing assets. Another key focus for us will be growth, where the company has already demonstrated an excellent track record. We will seek to grow the business both through conversions of existing hotels as well as new greenfield developments, and are hopeful that the scale of our capital base will help support Village’s growth potential.
HI: What are Blackstone’s plans for expanding the number of Village Hotels in the UK and potentially beyond?
PW: Village Hotels’ unique business model makes it a powerful brand for hotel conversions. Equally, the company has a long-term track record of successfully executing on new developments. We will be looking to expand its footprint through both avenues and, while initially focusing on the UK, we expect to also consider international markets where Village’s concept can be a good fit.
HI: Are there any specific operational improvements Blackstone aims to implement at Village Hotels?
PW: Village has been run exceptionally well under Gary, and there are no plans for significant changes to its proposition. Our scale and reach should allow us and the business to focus on growth, and allows us at Blackstone to provide valuable resources to the management team, whether that’s on procurement, distribution, IT or other services. We will seek to work hand-in-hand with management to combine the strength of both of our platforms.
HI: How does Blackstone plan to leverage its expertise and its existing portfolio to support Village Hotels’ growth?
PW: We have a long track record of investing in hospitality businesses, including in the UK, and believe that we can leverage our expertise to create value and support Village Hotels’ growth. Looking at our current UK portfolio, we have invested over £500 million of capex into Haven and Warner since we acquired the businesses, to upgrade and develop their sites and entertainment offering, as well as expand their footprint. Each portfolio company is different, but they all benefit from our asset management capabilities and a playbook that focuses on operational excellence, customer experience enhancement and growth – both organic and inorganic.
HI: What does the acquisition of Village Hotels mean for Warner Leisure. Will Blackstone be exploring any synergies?
PW: We expect that there may be operational synergies across both companies – for instance in relation to procurement. While there is considerable demographic overlap between their respective customer bases, they are two separate investments within our portfolio and will remain that way.
HI: What is Blackstone’s vision for the long-term future of Village Hotels?
PW: We see great long-term potential in Village Hotels and in the hospitality and leisure sector more broadly. Our mission is to support the business as it continues to deliver exceptional experiences for its customers, while maintaining its differentiated brand that makes it such a popular destination for all.