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The Earl of Cadogan’s real estate company, which owns nearly 100 acres of Chelsea land in London, is trying to run hotels as it looks to make higher profits and have more control over guests. Hotel in a high-end area.
The £5.4bn property currently operates five hotels with various partners and has added two new hotels to its portfolio in the past year.
Hotels have gotten a post-pandemic boost, making them one of the few strong sectors in the broader commercial real estate market and driving a flurry of deals.
Because Cadogan Real EstateThese investments are part of a strategy to increase profits by taking on riskier ventures beyond the traditional landlord role.
“The strategy for hotels is to take operational risks,” said Hugh Seaborn, group chief executive. He said the new approach is “very different from leasing something and letting someone else take the risk and benefit.”
Taking a larger role in operating the hotels will also give the property more control over the mix of lodging, restaurants and bars in the neighborhood, Seaborn added. .
Cadogan’s move is the latest by major London-based properties to promote new ventures to boost profits. The Duke of Westminster’s Grosvenor estate in Mayfair and Belgium has invested in more operations flexible workspace and has also launched a new lending strategy.
Cadogan’s latest hotel opening, last September, was At Sloane – a 30-bedroom, five-star hotel run by French hotelier Jean-Louis Costes. The estate this year completed the refurbishment of the former Draycott Hotel which they purchased and renamed The Chelsea Townhouse.
New assets adding to the existing portfolio include the Cadogan Hotel – best known as the scene of Oscar Wilde’s arrest – which reopened in 2019 following a major refit. This heritage has a history of more than 300 years dating back to the time of Sir Hans Sloane.
Cadogan reported on Wednesday that its operating profits, before capital items, rose 22% to £120m in 2023. The value of its assets rose 3%, up from 5.1bn pounds, adjusted for sales, purchases and capital expenditure.
Its retail portfolio, which accounts for the largest proportion of its holdings at 46%, has had its first year of recovery from the Covid-19 pandemic. Retailers at the property reported footfall and revenue about 10% higher than 2019 levels. Cadogan saw total rental income from retail increase 10%, to a record 96 million pounds.
Seaborn said the property is seeing benefits from the financial assistance it gave tenants during the pandemic, including charging restaurant rent only on their revenue, which This has helped those businesses bounce back.
Cadogan has also worked with the borough of Kensington and Chelsea – the wealthiest areas in the UK – to add 1,000 tables and chairs to the area, which they maintain. Seaborn said the changes have created “a more outdoor atmosphere in Chelsea”.
