CitizenM, a premium economy hotel chain, is seeking new growth capital and has engaged bankers to review a possible sale of either a minority stake or the entire company. The owners of the Dutch hotel company include Dutch pension firm APG, Singapore’s sovereign wealth fund GIC, APG Asset Management, and KRC Capital, a private equity firm founded by CitizenM founder Rattan Chadha. In early 2019, GIC took a 25% equity interest in CitizenM at an enterprise value of about $2.3 billion (€2 billion). In 2021, the company raised $1 billion from existing investors to expand post-pandemic, with more than half of the funds being used to expand the brand, which has grown to 40 properties and 10,000 rooms over five years.
Selling a stake or the entire company could allow some shareholders to recover their investments and potentially collect gains. CitizenM is a fully integrated hotel real estate developer and operator, which contrasts with the asset-light strategy favored by major hotel groups. This makes it a more attractive target for investment entities rather than traditional hotel companies. For example, Saudi Arabia’s Public Investment Fund recently acquired a significant minority stake in Rocco Forte Hotels in a deal that valued the portfolio at $1.8 billion, including debt. Additionally, in 2022, Cain joined Saudi Arabia’s Public Investment Fund in a $900 million investment in Aman Group.
The performance of hotel and short-term rental sector stocks within the ST200 index, which includes publicly traded companies across global markets, shows the impact of the ongoing pandemic on the accommodations sector. The index includes international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares. The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number, providing valuable insights into the sector’s overall health and stability.
CitizenM’s potential sale of a stake or the entire company could have far-reaching implications for the premium economy hotel chain and its investors. It would provide an opportunity for shareholders to recover their investments and potentially make gains from the sale. The company’s growth post-pandemic, with significant expansions in the number of properties and rooms, has positioned it as an attractive target for potential buyers, particularly investment entities looking to capitalize on the recovering accommodations sector. The Skift Travel 200 index offers a comprehensive overview of the financial performance of various travel companies, providing insights into the overall health and stability of the accommodations sector amid ongoing challenges and opportunities for growth. By engaging bankers to explore new growth capital options, CitizenM is taking proactive steps to secure its future and capitalize on potential opportunities for expansion and development in the evolving travel and hospitality industry.
