Bill Gates Is Buying Controlling Stake In Four Seasons At $10B Valuation

Microsoft Corporation MSFT co-founder Bill Gates’ investment firm Cascade Investment LLC is picking up a controlling stake in Four Seasons Hotels and Resorts in a deal that will value the luxury hotel chain at $10 billion including debt, the hotel-chain operator said on Wednesday.

What Happened: Cascade Investment will buy a 23.75% stake in the Four Seasons held by Saudi Arabian prince Alwaleed bin Talal's Kingdom Holding Company for $2.21 billion.

Cascade and Kingdom have held equal stakes in the company since the partners took it private in 2007.

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Four Seasons Chairman Isadore Sharp, who founded the hotel chain in 1960, retains a 5% holding through Triples Holdings Limited.

The deal is expected to close in January 2022, pending regulatory approvals. Following the closure of the deal, Cascade's stake in the hotel chain would rise to 71.25% while Kingdom’s stake will be down to 23.75%. 

Why It Matters: The deal comes at a time when the pandemic has hit the travel sector hard, including airlines and hotels. Though driven by pent-up demand among leisure travelers, the luxury segment has fared better when compared with the decimated corporate travel demand.

The average hotel room rates in the U.S. have climbed higher since the beginning of the year, helped by those travelers who are willing to spend more, which in turn has allowed hotels to raise their room rates. Revenue per available room — a key profitable measure tracked closely by the hotel industry — in the U.S. climbed to $80.53 in August from $43.81 in January, as per STR data.

Price Action: MSFT shares closed marginally higher at $300.21 on Wednesday.

Photo: Courtesy of Michael G Schroeder on Wikimedia