Mandarin Oriental International has agreed to acquire the Hotel Ritz, Madrid for €130 million (US$148 million) in a joint venture with The Olayan Group, a Saudi Arabian multinational group.
Mandarin Oriental and Olayan will each hold a 50% interest in the joint venture, which is purchasing all of the shares in the owning company, Hotel Ritz Madrid, S.A., from its existing shareholders, Belmond Spanish Holdings S.L.U. and Landis Inversiones, S.L..
The Hotel will undergo a comprehensive renovation in 2017, currently estimated to cost some €90 million (US$103 million). Mandarin Oriental’s total investment for its share in the project, including the acquisition, renovation and transaction expenses, is estimated at €111 million (US$126 million), with the Group’s share of the purchase price to be paid from cash reserves, and the renovation to be funded through an appropriate mixture of equity and debt. Mandarin Oriental will manage the Hotel under a long-term management agreement.
The renovation will encompass all rooms and public areas, with the Hotel also benefiting from the addition of a spa and a variety of new restaurants and bars, all designed to enhance the property’s position.
The 167-room Hotel, which first opened in 1910, is located within an exclusive residential area close to Madrid’s financial and commercial district and a number of the city’s most famous cultural attractions, including the Prado Museum and Retiro Park.
“We are pleased to join with Olayan for this project, which presents an exciting opportunity to extend our portfolio to another key European capital city,” said Edouard Ettedgui, Group Chief Executive of Mandarin Oriental. “This beautiful hotel will complement our award-winning property in Barcelona, and both should benefit from the overall economic recovery in the country,” he added.