Goldman Sachs sold the three hotels in Halkidiki that it had bought in 2022, when it planned to create a seaside resort brand in Greece and around the Mediterranean.
As The Wall Street Journal (WSJ) reports, Goldman Sachs bought the hotels, with plans to spruce them up and start welcoming guests as soon as this year. Tourism in the country was on a tear, and the bank saw an opportunity to snap up properties on the mainland with views of the Aegean Sea, rather than on pricier Greek islands.
This spring, Goldman abruptly sold the three hotels, barely breaking even on the roughly €100 million (about $117 million) it had invested in the project, according to people familiar with the matter. It also pulled the plug on its plans for a hotel brand in the region, the people said, per WSJ. The resorts never opened, and some employees who worked on the investment are no longer with the firm.
While the investment was a small one for Goldman’s asset-management division, it was emblematic of the firm’s search for big returns and steady fees to offset its lucrative but volatile Wall Street businesses, WSJ says. Its goal in Greece was to use mostly client money and financing to drive up the hotels’ value, then book big profits when they were sold. All the while, Goldman would collect management fees from clients whose money was invested.
When it bought the resorts, Goldman was enticed by the country’s strengthening economy, embrace of foreign investments, and cheaper property prices compared with Western Europe. Many hotels in Greece are also family-owned and switching hands to new generations who are more open to selling.
Other firms had also invested in the country, including Blackstone’s successful bet on Hotel Investment Partners, which has a portfolio of dozens of hotels in the Mediterranean that have spread to include around ten in Greece. Goldman decided its own Mediterranean adventure would begin in Greece.
Goldman Sachs’ investments in Greece’s hotels soared
The firm continued to cast about for additional hotel acquisitions and explored buying the Grand Resort Lagonissi, according to people familiar with the matter, per WSJ. The hotel sits on an area known as the Athenian Riviera, a stretch of beaches with new luxury hotels and residences. Goldman didn’t pursue the effort.
Last summer, Goldman President John Waldron visited Greece and met with the country’s Prime Minister and local bank chief executives. His message was clear: Goldman was invested in the country in a big way, both through its investment banking and asset management.
But by then, Goldman’s investment in the hotels was souring. The renovations required a gut job that would cost far more than the firm had expected. Goldman realized it would need more time and money to complete the project. The original plan had been to invest between about €150 million and €200 million ($175 million to $235 million). Costs for construction materials and labor increased, eating into the investment’s projected returns.
The firm sold the hotels in the spring to Sani/Ikos Group, a privately held company that owns and operates hotels in Greece and Spain. In the end, Goldman decided on a full pullout from hotel investments in the country—with the exception of its minority stake in real-estate investment company Prodea, WSJ reports.
The firm’s focus on investment banking and asset management in Greece remains otherwise unchanged. The new owner of the hotels announced a more than €400 million ($470 million) investment in the project. The properties will feature nearly 750 rooms, multiple pools, more than 30 restaurants and bars, theaters, and spas. The hotels are scheduled to open in 2029.