What’s behind Hotelier Sir Rocco Forte’s sale of 23% of the company he co-founded with his sister Olga Polizzi to an Italian sovereign wealth fund?
Perhaps the Italians were encouraged by Sir Rocco’s Italian heritage – his father Lord Forte was born in northern Italy but emigrated to Scotland aged four, and ran family-owned cafes and milk bars in Brighton and London.
Because the news about his group has not been great since 2008, when customer numbers crashed by 40%. UK bank HBOS averted problems in 2010 by extending a loan, and in 2012 the group was in talks with two Italian banks about refinancing The Verdura, a Sicilian golfing resort, following a loan covenant breach. Sir Rocco dropped hotels in Prague, Abu Dhabi, Geneva and Manchester to shore up his group’s finances.
However, the tie-up with the Fondo Strategico Italiano suggests that the tide is turning. The group says that it will launch hotels in Venice, Naples and Milan, and expand the Sicilian operation. With three generations in the business, you can’t doubt their knowledge or dedication.
So what’s the story in Italy? No doubt the financial clout of a sovereign wealth fund will offer welcome cash. As Sir Rocco says, though: “As a tourism industry [Italy] has a lot of potential”. That’s a suggestive phrase, as Italy is hardly short of tourists. He’s talking about Chinese travellers, presumably. The other cities where Rocco Forte plans to open hotels – Madrid, New York, Paris and Shanghai – are also swimming in new Chinese money.
We are getting used to hearing about Italian firms welcoming Chinese investors, to open up new markets for them. This is another kind of China play. The marathon-running Sir Rocco is, as you might expect, looking long-term.