John Pritzker and New York’s Pomeranc family have combined their high-end hotel businesses into a single operator of hotels that will range from West Coats boutiques to East Coast luxury properties.
Tentatively called JT Hospitality, the new company will be made up of the 33 boutique hotels operated by Pritzker heir John Pritzker’s Joie de Vivre Hospitality and the 12 luxury hotels operated by the Pomeranc family’s Thompson Hotels.
Neither party is commenting on financial details of the merger except to say that each group will own a 50% stake in JT Hospitality. Expected annual revenue is roughly $500 million.
The deal comes at a time when global economic instability has solidified uncertainty among investors concerning the hotel industry. Stocks of real-estate investment trusts that own hotels suffered in the third quarter, with some declining by double-digit percentages as investors worried the economic climate would stifle corporate and leisure travel. Despite this concern, U.S. hotel performance, on average, has yet to show a significant impact from the global economic worries. According to Smith Travel Research, nightly revenue per available room at U.S. hotels in August registered a 7.2$ increase from a year earlier to $67.64.
The merger is an attempt by Pritzker and the Pomeranc family to gain ground in the flourishing market for lifestyle hotels, loosely defined as “stylish hotels designed to reflect the tastes of their neighborhoods while avoiding the standardization of giants brands.” The parties plan to announce the merger today. Co-chairmen of JT Hospitality will be Pritzker, 58, and Jason Pomeranc, 40, the youngest of the three Pomeranc brothers who own Thompson Hotels.
JT Hospitality only manages hotels and will own none of those that belong to the Joe de Vivre and Thompson brands. The company’s various principals, however, do own stakes in several hotels. The Pomeranc family owns eight Thompson hotels and Pritzker’s Geolo owns four Joie de Vivre hotels. The principals will likely use their capital to expand the merged company’s brands by buying additional hotels. Pritzker said, “We’ll use every device that is appropriate to the end goal.” Combining the brands allows JT Hospitality to offer travelers and hotel builders a range of options – luxury hotels as well as diverse midmarket boutiques. The company also intends to eventually add resorts to the collection too. Pomeranc said, “We believe this will redefine how people look at the lifestyle [hotel] industry.”
Source: Wall Street Journal
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