Leading drinks company Diageo has sold The Gleneagles Hotel to the private-equity hotel developer Ennismore for a so-far undisclosed sum.
Diageo had owned the property since 1984 but did not regard it as part of its core business and analysts say that the move re-affirms the company’s plans to focus more on selling spirits. The company is expected to sell off its small wine portfolio. Per Bloomberg,
The hotel business of Gleneagles generated revenues of £43.5 million and an operating profit of £2.6 million with a return on invested capital of 4% based on the book value for the year ended 30 June 2014.
Following Gleneagles hosting of the highly successful Ryder Cup last September there has been a succession or rumours about the Hotel being sold with a potential price tag of more than £200m. US private equity firm KSL Capital Partners, who own The Belfry, and Ralph Trustees, owner of London’s Athenaeum hotel and The Grove in Hertfordshire, were among the firms said to be interested and property specialist Jones Lang LaSalle was reported to have been hired to test the water before Diageo decided whether to sell or not. It is thought that Ennismore, the successful bidder, must have paid at least £150m.
A few months ago a Diageo spokesman said it had received “numerous expressions of interest, particularly since the Ryder Cup.”
The spokesman continued: “Gleneagles is one of the UK’s finest luxury hotels and one of the world’s most fantastic golf resorts. We are sure there are many people who would love to own Gleneagles and have received numerous expressions of interest over the years and particularly since the Ryder Cup. As you would expect we have a duty to consider such interest carefully.”
The company has tested the market on at least two occasions. In 1998 offers of £60m fell short of the expected figure – thought to have been about £100m.
The hotel was conceived by Donald Matheson, then general manager of the Caledonian Railway, while holidaying nearby in 1910. He was impressed by the countryside and dreamed up a palace-style hotel surrounded by golf courses. Gleneagles was opened in 1924 by successor firm London, Midland and Scottish Railway. The hotel has its own station, on the Stirling-Perth line two miles away, which was upgraded for the Ryder Cup.
When the railways were nationalised after the Second World War, Gleneagles became part of British Transport Hotels in 1948. It was sold by British Rail in 1981 to a consortium of Scottish businessmen for £10m, along with the Caledonian and North British (now Balmoral) hotels in Edinburgh.
The hotel was bought by Perth-based distiller Arthur Bell in 1984, which sold it to Guinness the following year, both of which eventually became part of Diageo.
Bernard Murphy, Managing Director of The Gleneagles Hotel has posted the following message on the Hotel website:
“I’m delighted to share the news that Gleneagles has a new owner: Ennismore. We very much look forward to working with Ennismore, and are excited about the possibilities of this new chapter in Gleneagles’ history.
“We have enjoyed a great relationship with Diageo over the last three decades, culminating in the hosting of what has been described as ‘the best ever Ryder Cup’ on the PGA Centenary Course last September.
“Looking ahead, the business is going from strength to strength and bookings for the summer period are very strong. This is in no small part thanks to the hard work of our team of 900 dedicated staff.
“For the moment our priority is, as always, to provide fantastic customer service and memorable experiences for our guests, so that Gleneagles can continue to flourish in the future.”
“In the meantime, it’s very much business as usual for our members, staff and guests, and forward bookings will be unaffected.”
The son-in-law of Sunil Mittal, chairman of multi-national telecoms firm Bharti Airtel, 34 year-old Sharan Pasricha is the founder and chief executive of Ennismore, new owner of the Gleneagles Hotel and he has pledged to keep the existing management.
Gleneagles Hotel www.gleneagles.com