In a bid to bolster its financial standing, CitizenM, the renowned premium economy hotel chain, is exploring avenues for a potential sale, as disclosed in a recent report by the Financial Times. Advised by Morgan Stanley and Eastdil Secured, the company is contemplating the sale of either a minority stake or the entirety of its operations.
CitizenM's move to engage bankers signals a strategic shift aimed at securing fresh capital for future growth endeavors. While the company refrains from divulging further details, a spokesperson affirmed the quest for new avenues of expansion.
With stakeholders including Dutch pension firm APG, Singapore's GIC, APG Asset Management, and private equity firm KRC Capital, CitizenM boasts a diverse ownership landscape. Notably, GIC acquired a significant equity interest in the company back in 2019, valuing it at approximately $2.3 billion.
Despite the challenges posed by the pandemic, CitizenM has exhibited resilience by raising $1 billion from existing investors in 2021. A substantial portion of this funding has been allocated towards expanding its footprint, with the company doubling its presence to encompass 40 properties and 10,000 rooms over the past five years.
While the possibility of a sale looms, potential buyers are speculated to include investment entities seeking to capitalize on the hospitality sector's recovery. Recent investments by entities like Saudi Arabia's Public Investment Fund in luxury hotel chains signify an appetite for strategic acquisitions within the industry.
CitizenM's fully integrated business model contrasts with the asset-light strategies adopted by major hotel groups. As industry dynamics evolve, the company's decision to explore a sale underscores its adaptability to prevailing market conditions.
As stakeholders monitor developments within the accommodations sector, a keen eye is cast upon the performance of hospitality stocks. The Accommodations Sector Stock Index provides insights into the trajectory of publicly traded companies, reflecting broader market sentiments and investment trends.
In the ever-evolving landscape of the hospitality industry, CitizenM's strategic review for a potential sale epitomizes its proactive approach towards capital optimization. With stakeholders poised for a significant decision, the outcome of this deliberation will undoubtedly reverberate across the sector, shaping its trajectory in the post-pandemic era.
Source/Photo: Skift