No quit in Sir Rocco Forte

As he approaches age 79, hotel industry icon and senior statesman Sir Rocco Forte, who used to compete in Iron Man events and remains fit and trim, says he has been reinvigorated by an early December deal that moves 49% of Rocco Forte Hotels (RFH) to Saudi Arabia’s Public Investment Fund (PIF). He believes the deal will jump start growth and perhaps lead to a doubling of the 14-hotel luxury group in about five years.

Still holding 51% of the company with his sister Olga Polizzi, Forte told Hotel Investment Today just before Christmas that he is still very energetic and raring to go. “Everybody sort of looks at my age and thinks I should be retired by now. But I think Rupert Murdoch retired too early, and now look at him,” he quipped. “I have a long way to go.”

Post transaction, the Forte family will retain majority ownership and control with Italian entity CDPE Investimenti selling its 23% stake and Forte’s sisters who are not involved in the business divesting their shares.

PIF’s purchase reportedly gives the hotel group an enterprise value of around £1.4 billion ($1.8 billion). “When people put a value on you, everybody sort of perks up their ears and thinks, ‘well, if someone like this thinks you're worth investing into at that level, then it’s a worthwhile company.’ So, I think it has raised our profile, which will help us in terms of development,” Forte said.

I think I have a very good partner. They are strategic and will let management get on with things…They will help us to move forward much more quickly than I could have done in the old situation.

Sir Rocco Forte

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PIF’s investment will include an element of primary equity, which will accelerate the brand’s expansion in both existing and new global markets. RFH has opened or committed eight new properties in recent years. Established in 1996, the group today operates 14 hotels and resorts, as well as 20 private villas. A further three hotels are due to open in 2024 and 2025.

Forte will remain executive chairman, alongside his sister Olga, who will continue as deputy chairman. Forte’s children, Charles, Lydia and Irene will also continue to hold key roles in the business.

The deal started to come together about a year and a half ago when Forte saw several transactions in the luxury hotel market with high multiples, realizing it would be a good time to test the market. The group put out a teaser to about 20 potential investors and PIF came back looking for an exclusive arrangement. They made an offer attractive enough for Forte to move forward and a few months later had an agreement.

“I wanted to make sure that I had a long-term partner, someone with a new strategic and long-term view to help take the company forward over the next 5 to 10 years,” Forte explained. “I think I have a very good partner. They are strategic and will let management get on with things…They will help us to move forward much more quickly than I could have done in the old situation.”

Forte said the existing organization is in very good shape and capable of moving faster. In fact, his son, Charles, is running the development side and is already moving quite quickly. “Most of our development has been in Italy and most of our pipeline is in Italy,” Forte added. “With PIF, it will be easier for us to become more international – for example, getting into the U.S… People see you with a very strong financial partner and they’re more inclined to do business with you. We’ve actually had quite a lot of approaches from developers since the deal was announced.”

Rocco Forte Hotels Brown's Hotel in London

RFH will look at management, leases, acquisitions – a bit of everything, according to Forte. It has a management deal signed in Sardinia set to open in 2025 and Forte said they are in the process of signing a management deal in Dubai. They are opening in Milan in 2025 and have three other projects in Italy that should be completed by 2026.

“I’d like to look at three new hotels a year, which means that in five years we would double what we are now in terms of number of properties,” Forte said.

And as for the U.S., he said the group is talking to several developers now and is hopeful it will lead to a deal. “I’d like to be in the States as 25% of my business comes out of the States anyway. It makes sense to be there.”

Forte also identified several different locations in Spain where it should have hotels, and he wants to be in Paris. With its new partner, obviously RFH will look at Saudi Arabia and Forte is planning a January trip there to look at the various possibilities. “It will it be easier for us to do things in the Middle East because of this deal with PIF. We could end up setting up an office in that part of the world to expand more quickly.”

The existing RFH team continues to operate the business with the only shift being a wider range of development opportunities, something Forte said he welcomes.

“We’re an interesting partner in terms of luxury hotel development,” Forte continued. “We’re different from most of the major brands. We create hotels which are less cookie cutter and offer a very warm and friendly service with a high level of professionalism in the delivery. We also differentiate from other hotels with higher achieved room rates in the various markets. We are leaders in a number of markets in which we operate. So, we’re a very good partner.”