Terra Firma

Le Meridien

Description

Meridien consisted of the Le Meridien Hotel Group, the Principal Hotel Group and the Cumberland Hotel. The company owned 143 mostly four and five star hotels in prime locations around the world, including 76 management contracts.

Strategy

Terra Firma identified an arbitrage between the high value assigned by the debt markets to hotel assets and the relatively low value assigned by the equity markets to hotel owner-operators. The value creation plan at Meridien was based on refurbishing the properties, including converting dead space to revenue-generating space ,and on repositioning the brand with the business traveller.

Outcome

Following a global slump in international travel, specifically business travel, post Sept 11 2001, Le Meridien Group got into financial difficulty in the first quarter of 2003. By the end of 2003, the Group had been restructured and re-capitalised. In 2005, the finance providers were paid in full and the business was sold to a trade buyer.

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