SAN FRANCISCO— Having established a beachhead in two major gateway cities in the Northeast in the past 18 months, Mumbai, India-based Taj Hotels, Resorts and Palaces took another giant step last month in fulfilling an expansion strategy first articulated in 2005. It agreed to acquire the Campton Place Hotel here from the Kor Hotel Group for $58 million. The Campton Place met three criteria set by Taj’s managing director and CEO, Raymond Bickson, when the brand, which is part of the Tata Group— one of India’s largest industrial conglomerates with interests in steel and trucking— set out to create a presence in the U.S. That criteria is destination, location of the property within that destination and the quality of the asset. “We only want to be in the major markets, where we can make a significant impact,” Bickson has said in delineating the strategy. “Then considering these markets invariably come with high barriers to entry, we want to be in the best locations, those that appeal to both business and leisure travelers.” The Campton Place’s location off Union Square qualifies. Plus, the historic, 110-room Campton Place is a luxury hotel with a service profile and amenities that match Taj’s properties, not only in India, but in the United Kingdom as well as the two Northeast hotels: the Pierre in New York and the former Ritz-Carlton Boston, which has been rebranded as the Taj Boston and was acquired in January for $170 million from New York-based Millennium Partners. Campton Place gives Taj that clear West Coast outpost. And aside from the hotel itself, the Campton Place’s destination restaurant—that bears the hotel name— is also highly regarded. Taj’s reason for wanting a presence in the U.S. market is the same rationale other international hotel companies— ranging from Shangri-La and Peninsula to Jumeirah and Mandarin Oriental— have used for wanting to build a name in America in the past few years. “Any company that wants to be thought of as global has to be in the U.S.,” Bickson said. “It’s such a large and important market. It is a place you simply have to be.” Also, in terms of the key business travel market, corporate travel buyers for large corporations are most interested in working with hotel companies that have distribution in as many of the major global markets as possible. Like Taj, Jumeirah seems to favor acquiring established properties in the U.S. because it’s a faster form of growth. The others, including Mandarin Oriental, which has built the largest U.S. presence, favor new construction. The U.S. aside, Taj has expanded recently in Qatar and Dubai, United Arab Emirates, in the Middle East; Thailand and Australia in the Pacific Rim; and South Africa. Growth for Taj ideally would mean direct ownership, but should only a management contract be available for the right asset in an important market, it’s prepared to serve solely as manager. Such was the case with The Pierre. Taj had been searching for a foothold in New York. In assuming management of the Pierre, which is a residential co-op as well as a traditional hotel, Taj agreed to invest as much as $35 million in upgrades. As a co-op, the cooperative corporation owns the building. Four Seasons Hotels & Resorts had previously managed the hotel. The first phase of those renovations included the Pierre ballroom, which is a popular site among New York’s high society for banquets and weddings. The new ballroom was unveiled in March. When Taj finds an asset it wants, it’s prepared to pay dearly. Kor had only owned Campton Place for 18 months, paying $44 million in late 2005. But hotel values in San Francisco in recent months have appreciated rapidly. The same has been true in other major markets as an abundance of capital chases a limited number of deals. Specific to San Francisco, the market fell badly post-Sept. 11, but had a slower climb back than some other markets because of the high-tech bust. But two other recent hotel transactions demonstrate
