Claridge’s, Maybourne and the £800 million award: the case every hotel investor should study before buying a hotel

A multimillion-pound award, three landmark London hotels and one decisive question: who captures the value created?

A reported arbitral award of between £700 million and £800 million, three icons of global hospitality — Claridge’s, The Connaught and The Berkeley — and a dispute built around a question that every hotel investor should take seriously: how should value created after the acquisition, refurbishment and repositioning of a hotel be measured?

The dispute between Irish businessman Paddy McKillen and the Qatari ownership of Maybourne Hotel Group is not simply a clash between former business partners. It is a technical case study in hotel finance, governance, capex, arbitration, asset valuation and post-closing contractual architecture.

The case shows what can happen when a hotel is no longer just a property, but a value platform made up of real estate ownership, brand equity, operating performance, international reputation, transformation capex, debt, management companies, advisory arrangements, deferred economic rights and earn-out clauses.

The central point is this: when a hotel increases dramatically in value, the contract must explain with precision who participates in that uplift, on what basis, with which deductions and under which valuation methodology.

In the Maybourne-McKillen case, according to publicly available information, McKillen argued that he was entitled to a share of the increase in value of the London hotels after the group was sold to Qatari ownership in 2015. Financial press reports have referred to a claim of more than £1 billion and to an award in McKillen’s favour in the region of £700 million to £800 million.

For the Italian hotel market, where family owners, funds, foreign investors, luxury operators and hotel groups are increasingly involved in hotel asset transactions, this case offers a very practical lesson: hotel value should not merely be created. It must be designed, measured, documented and contractually protected.

The key numbers in the Maybourne-McKillen case

These numbers do not merely describe a dispute. They describe an economic structure: a seller who remains involved in value creation, a buyer backed by sovereign capital, iconic hotels requiring significant capex and a contract that must convert future value growth into a payment formula.

The 10 technical lessons for hotel investors

Before turning to the timeline, the case can be summarised in ten practical lessons.

1. A hotel earn-out must be a technical formula, not a commercial promise.
If a future payment depends on the increase in value of a hotel, the contract must define the starting date, the final date, the asset perimeter, the methodology, the appointed advisers, the treatment of debt, the treatment of capex and the dispute mechanism.

2. Capex creates value, but it can also reduce the payout base.
In luxury hotels, refurbishment works may increase the value of the asset, but they may also reduce the basis on which an earn-out is calculated.

3. The asset perimeter must be locked down.
If the group expands from London to Beverly Hills or the Riviera, the contract must specify whether the economic right applies only to the original assets or also to future developments.

4. A seller who remains involved in management must have clear information rights.
Access to documents, financial data, capex reports, budgets, contracts and valuations must be regulated before the relationship breaks down.

5. Post-closing governance is part of the economics of the transaction.
It is not enough to sell shares and retain an operational role. Powers, duration, removal rights, causes for exclusion and the impact on the deferred payment must all be defined.

6. Oral understandings are fragile in international disputes.
The Hume Street case shows that a claim based on informal arrangements may fail quickly if it is not clear who contracted with whom, when and for what consideration.

7. Valuation must distinguish between gross value, net value and capex-adjusted value.
In an asset-heavy hotel, the difference between gross asset value, net asset value and net uplift can be worth hundreds of millions.

8. Arbitration protects confidentiality, but it reduces market transparency.
In the Maybourne case, the text of the main award does not appear to be publicly available. For external market participants, this limits the ability to reconstruct the tribunal’s reasoning in detail.

9. A reputational breakdown can generate satellite litigation.
Access revocations, letters, allegations, exclusion from sites and internal communications can become the basis for defamation, conspiracy or other claims.

10. In trophy assets, the dispute is not only about price: it is about who controls the story of value creation.
Who created the value? Capital? Brand? Market timing? The promoter? Management? Capex? The answer must be written into the contract before the dispute arises.

The structure of the case: Coroin, Maybourne, McKillen and the Qatari ownership

To understand the case, it is necessary to distinguish three layers.

The first is Coroin Limited, the historic vehicle linked to the London hotels formerly associated with the Savoy Group. Coroin sits at the centre of the first phase of the dispute, which concerned governance, shareholder rights and control.

The second is Maybourne Hotel Group, now a luxury hotel brand and platform. The group is associated with hotels including Claridge’s, The Connaught, The Berkeley, The Emory, The Maybourne Beverly Hills and The Maybourne Riviera.

The third is the post-2015 economic relationship between Paddy McKillen and the Qatari ownership, linked in public and judicial sources to the interests of Sheikh Hamad Bin Khalifa Al Thani and Sheikh Hamad bin Jassim bin Jaber Al Thani, who appear as central figures in the ownership structure.

McKillen had been a historic shareholder and a key figure in the Maybourne story. In the first phase, he defended his position against the advance of the Barclay interests. In the second phase, after the Qatari acquisition, the dispute shifted from corporate control to the allocation of economic upside.

That shift is crucial. The first battle was about control. The second was about value.

The key parties in the dossier

Technical timeline of the events

This timeline shows an essential point: the dispute did not emerge suddenly. It was the result of a long sequence in which corporate control, valuation, governance, capex and personal relationships became progressively intertwined.

The first phase: the Coroin corporate battle and McKillen’s defeat

Between 2011 and 2013, McKillen fought a long legal battle in England around Coroin. The issues included pre-emption rights, shareholder relations, directors’ duties, debt allocation and unfair prejudice.

The litigation centred on the argument that certain corporate and financial steps had altered the original balance and allowed the Barclay interests to advance towards control of the group. McKillen argued that he had been prejudiced. The English courts, however, adopted a strict reading of the contractual documents and corporate rules.

The main case was Patrick McKillen v Misland (Cyprus) Investments Ltd & others [2012] EWHC 2343 (Ch). In 2012, the High Court dismissed McKillen’s claims. In 2013, the Court of Appeal upheld that approach and dismissed the appeal.

From a technical perspective, this phase shows that in hotel investment vehicles, pre-emption rights, good faith, directors’ duties and unfair prejudice cannot be invoked in general terms. They must rest on precise clauses, attributable conduct, demonstrable loss and robust causation.

For Italian hotel investors, this is highly relevant. Many hotel transactions are structured through special purpose vehicles, financial partners, industrial partners, bank debt, pledges, security packages, options, shareholders’ agreements and exit rights. If the clauses are not coherent, litigation can become unavoidable.

The second phase: the Constellation deal and the creation of the deferred economic right

In 2015, the Barclay phase closed with the entry of the Qatari interests through Constellation Hotels. According to public accounts, the transaction brought the group under new ownership and saw McKillen exit his shareholder position while retaining an economic relationship tied to the future value of the hotels.

This is where the core of the later arbitration begins.

The agreement reportedly granted McKillen a right linked to the increase in value of the London hotels. Public sources have referred to 36% of the uplift, meaning the increase in value net of refurbishment costs.

If accurate, this formula is highly sensitive. It is not enough to say “36% of the increase in value”. The contract must determine:

• the baseline against which the value increase is measured;

• the expert or process used to determine value;

• the final valuation date;

• the assets included;

• deductible costs;

• capitalised works;

• whether debt is included or excluded;

• the treatment of any intragroup financing;

• the impact of new hotels and future developments;

• the consequences of early termination of the relationship.

The case shows that an apparently simple percentage can contain dozens of economic variables.

The technical issue: how do you calculate the uplift of a trophy hotel asset?

In a complex hotel investment, uplift is never a neutral number. It can be calculated in several ways.

In the Maybourne case, the dispute likely arose from the intersection of these approaches. Claridge’s and the other hotels are not standard assets. Their value does not depend solely on an EBITDA multiple. It depends on rarity, reputation, luxury positioning, pricing power and invested capital.

That is why valuation of iconic hotels requires a far more sophisticated framework than the one used for an ordinary hotel asset.

Capex: transformative investment or deductible cost?

Capex is the most sensitive point in the entire dossier.

In luxury hotels, capex creates value because it can:

• increase ADR;

• reposition the product;

• attract international guests;

• expand suites and premium spaces;

• upgrade F&B, spa and service areas;

• strengthen the brand;

• extend the economic life of the asset;

• support new luxury standards;

• improve market perception.

But capex is also a cost. If a contract provides that the payout is calculated on the increase in value “net of refurbishment costs”, every pound of capex may become a deduction from the calculation base.

This is where the tension arises: for McKillen, capex may be seen as evidence of the transformation work and therefore of value creation. For the ownership, the same capex may be seen as invested capital that must be subtracted before recognising net uplift.

In practical terms, the dispute may turn on highly technical questions:

• which works are capex and which are ordinary maintenance?

• which costs are directly attributable to the hotels within the perimeter?

• are brand development costs deductible?

• are financing costs on the works deductible?

• should intragroup costs enter the calculation?

• should capex be measured at historic cost or reflected in final value?

• how should works not completed by the valuation date be treated?

• should value created by a project that has not yet stabilised be recognised immediately or deferred?

These are not theoretical questions. In a luxury hotel portfolio, they can move hundreds of millions.

Asset perimeter: London only, or Beverly Hills and the Riviera as well?

Another technical issue is the objective perimeter of the agreement.

Maybourne today is larger than the original London trio. It includes, among others, The Emory, The Maybourne Beverly Hills and The Maybourne Riviera. However, according to public information, the dispute included a disagreement over whether Beverly Hills and the Riviera were inside or outside the perimeter of McKillen’s agreement.

This is a crucial issue in hotel transactions.

When an investor buys a portfolio and then uses the brand to open new hotels, does the value generated by those new openings belong solely to the new owner, or does it form part of the calculation base for the person who contributed to the original brand relaunch?

The answer cannot be left to later interpretation. It must be written.

In a hotel earn-out, the perimeter should distinguish at least between:

• existing hotels;

• hotels under development;

• hotels acquired later;

• hotels managed but not owned;

• brand value;

• management company value;

• real estate rights;

• corporate vehicles;

• management agreements;

• indirect holdings;

• assets outside the main jurisdiction.

The Maybourne case shows that when a brand grows, the economic perimeter can become one of the most dangerous areas of the contract.

Post-closing governance: when the seller remains in the group

After 2015, McKillen was not simply a former shareholder. According to available accounts, he remained involved in the management, development and value creation of the group. This created a hybrid position: no longer a full owner, but still economically interested in the future growth of value.

This is common in the Italian market too. An owner sells the hotel or opens the capital to a fund, but remains involved:

• as a director;

• as a consultant;

• as asset manager;

• as project manager;

• as a guarantor of operational continuity;

• as an earn-out beneficiary;

• as promoter of the value creation plan.

This structure can work very well while trust remains intact. But if the relationship breaks down, it becomes unstable.

In the Maybourne case, a decisive moment was the termination of the board positions of McKillen and Liam Cunningham at Maybourne Hotels Limited, effective 1 April 2022. A few days later, on 13 April 2022, letters sent to individuals close to McKillen revoked access rights to group sites. Satellite disputes then arose, including in Ireland, involving issues of defamation, conspiracy, jurisdiction and forum.

This shows that the operational exit from a hotel group is never merely a governance issue. It can affect:

• access to documents;

• control over construction sites;

• ability to verify costs;

• personal reputation;

• relationships with teams and suppliers;

• bargaining position over the earn-out;

• documentary evidence in a future arbitration.

To prevent these risks, post-closing agreements should expressly regulate what happens if the seller-manager is removed before the final valuation date.

The arbitration: what we know and what we do not know

The core economic dispute has been described as an arbitration in London, reportedly an LCIA arbitration. However, the text of the award does not appear to be publicly available. Nor do the case number, the exact date of the award, the full identity of the arbitral tribunal or the full text of the 2015 clause appear to be publicly available.

This is important for the quality of the analysis.

It is possible to state that the press reported an award in favour of McKillen in the region of £700 million to £800 million. It is possible to state that the publicly reported claim exceeded £1 billion. It is possible to state that the core dispute concerned McKillen’s right to participate in the increase in value of the London hotels.

It is not possible to treat the content of the award as if every detail were public.

For investors, this lack of transparency is another lesson. Arbitration protects confidentiality, but it reduces market transparency. When a dispute concerns trophy assets, debt, capex and potentially billion-pound payouts, confidentiality protects the parties but limits what the market can learn.

Hume Street v Al-Thani: why informal claims can fail

One satellite proceeding is particularly useful from a technical perspective: Hume Street Management Consultants Ltd v Al-Thani & Ors [2025] EWHC 404 (TCC).

Hume Street, a company linked to McKillen, brought a claim of approximately £3.6 million for alleged project management services relating to Forbes House. According to the court’s account, the claim was based on an oral agreement, conduct and/or unjust enrichment.

The English Technology and Construction Court, however, found the claim insufficiently coherent and set aside service out. The technical point is crucial: it was not sufficiently clear who had contracted with whom, when, for what consideration and on what legal basis. In particular, the distinction between McKillen as an individual and Hume Street as a company was problematic.

For the hotel sector, this is a major lesson.

Many hotel transactions are driven by personal relationships. The entrepreneur “follows the project”, “coordinates the works”, “deals with the architects”, “manages the brand”, “handles the relationship with the ownership” or “takes care of development”. But in court, those statements are not enough.

It must be clear:

• who the contracting party is;

• which company provides the service;

• who approved the mandate;

• what fee is due;

• which activities are included;

• which forum decides disputes;

• which law governs the contract;

• which documents prove the mandate;

• which invoices were issued;

• which deliverables were produced.

The Hume Street case does not eliminate the main arbitration, which appears to have rested on more structured agreements. But it shows that accessory claims built on informal relationships can be highly vulnerable.

Delany v Maybourne: when an operational breakdown becomes reputational risk

Another satellite proceeding is Delany v SEDH & Ors / Delany v Maybourne Hotels Ltd & Ors [2026] IEHC 243, before the Irish High Court.

The case arose from the letters of 13 April 2022 revoking access for individuals close to the McKillen group. Ronnie Delany, an associate linked to McKillen and Hume Street, brought proceedings in relation to alleged defamation and conspiracy.

The proceeding did not decide the economic merits of the Maybourne award. But it is important because it shows how the separation between ownership and former management can generate reputational and jurisdictional disputes.

The Irish case involved technical issues such as:

• service out;

• forum non conveniens;

• publication in Ireland;

• connections between France, the United Kingdom and Ireland;

• the role of operating companies;

• internal communications and their potential defamatory effect.

For anyone managing hotels, construction sites and international teams, this is a very practical point. When a relationship with a former partner or manager breaks down, every communication must be handled with extreme care. An access revocation letter can become evidence. A communication to teams can be read as reputational harm. A poorly drafted sentence can open a new litigation front.

Risk matrix for hotel investors

Maybourne as a value platform: brand, luxury, pricing power and debt

Beyond the dispute, Maybourne is an example of a luxury hotel platform with very high capital intensity.

Claridge’s, The Connaught and The Berkeley are not ordinary hotels. They are rare assets with a combination of history, location, clientele, reputation and pricing power that is extremely difficult to replicate. Their value depends on real estate fundamentals, but also on industrial and intangible elements.

Value may be supported by:

• higher average daily rates;

• greater weight of suites and premium rooms;

• high-end F&B;

• spa and ancillary services;

• events;

• international reputation;

• post-pandemic luxury demand;

• scarcity of comparable assets;

• appeal to sovereign capital and family offices;

• potential to extend the brand into other markets.

But this growth requires capital. Capital creates debt, security, refinancing, intragroup interest and pressure on cash flows.

For this reason, when valuing a luxury hotel group, it is not enough to look at revenue. The following must be read together:

• operating profit and loss;

• balance sheet structure;

• indebtedness;

• historic and future capex;

• real estate value;

• brand value;

• management agreements;

• operating companies;

• intragroup flows;

• covenants and security.

The Maybourne case illustrates this complexity perfectly. An asset can increase significantly in value while also carrying costs, works and financial structures that make the allocation of that increase highly contentious.

Why the case matters for hotel transactions in Italy

Italy may not have many Claridge’s, but it has many assets with similar characteristics on a different scale: historic hotels, iconic buildings, undercapitalised family-owned hotels, assets requiring repositioning, properties in unique tourist locations, buildings suitable for conversion, trophy hotels in art cities, resorts to be relaunched and portfolios to be institutionalised.

In these cases, the questions are the same:

• what is the hotel worth today?

• what will it be worth after capex?

• who finances the works?

• who manages the project?

• who captures the increase in value?

• does the seller remain involved?

• is there an earn-out?

• is the value real estate value or operating value?

• does the brand belong to the owner or the operator?

• what happens if the relationship breaks down?

Many Italian transactions risk underestimating these points. The parties focus on price, but not enough on how future value will be calculated. They negotiate the sale, but not enough on post-closing governance. They provide for a future payment, but not enough on capex treatment. They talk about value creation, but fail to build a real valuation protocol.

The Maybourne-McKillen case shows that these details, if overlooked, can become the source of major disputes.

How a well-structured hotel earn-out should be drafted

An earn-out or deferred payout in a hotel transaction should contain at least ten technical blocks.

Without these blocks, an earn-out can become a time bomb.

From due diligence to risk management: what to check before investing

A hotel investor entering a complex transaction should carry out not only real estate and financial due diligence, but also contractual and litigation due diligence.

The areas to review include at least:

• corporate chain;

• beneficial ownership;

• shareholders’ agreements;

• pre-emption rights;

• pledges and security;

• senior and intragroup debt;

• management agreements;

• lease or business lease agreements;

• capex plan;

• building permits;

• status of works;

• contracts with advisers and project managers;

• pending litigation;

• confidential arbitrations;

• earn-out rights;

• information rights of former shareholders or sellers;

• change of control clauses;

• relationships with brands and operators;

• reputational risks.

The Maybourne case shows that the real risk may not be visible in the current profit and loss account. It may be hidden in a past agreement, a value calculation clause, a deferred economic right or a personal relationship that was never properly documented.

The financial lesson: hotel value is a contractual construction

The major lesson of the Maybourne-McKillen case is that the value of a hotel is not only a market figure. It is also a contractual construction.

Two parties can look at the same hotel and see two different values.

The ownership may say: we invested capital, funded capex, assumed risk, financed works and developed the brand.

The promoter or former shareholder may say: without my vision, management and value creation work, that uplift would never have existed.

Both positions may contain some truth. But the market cannot rely on the parties’ memory. It must rely on contracts, numbers, reports, valuations and procedures.

In hotel investments, value must not only be created. It must be made measurable.

Final checklist for owners and investors

Before signing a hotel transaction with an earn-out, deferred payout or future value-sharing mechanism, at least twelve questions must be answered:

1. What is the initial value of the hotel and who certifies it?

2. Which method will be used to calculate the final value?

3. Will the value be gross, net or capex-adjusted?

4. Which costs will be deductible?

5. Which assets are included in the perimeter?

6. Are new hotels or future developments included or excluded?

7. Will the seller remain involved in governance?

8. What happens if the seller is removed before the deadline?

9. Which information rights will the seller have?

10. Who decides in the event of a technical disagreement?

11. Will the award or decision be easily enforceable?

12. Does the contract clearly distinguish between the individual, the advisory company, the ownership vehicle and the management company?

If even one of these answers is vague, the risk has already entered the transaction.

Further reading for hotel owners, investors and operators

Those who wish to explore hotel valuation, management, KPIs, contracts, revenue management, hotel acquisitions and hotel sales in more depth can consult the hotel guides by Roberto Necci at www.robertonecci.it.

Further dossiers, market analyses and hotel investment insights are available on the Investimenti Alberghieri blog.

Additional updates on hotel transactions, investors and market trends are also published on the InvestHotel blog.

Do you need to value a hotel, structure an investment or reduce the risks of a hotel transaction?

Hotel Management Group supports owners, investors, entrepreneurial families and operators during the most delicate phases of a hotel investment:

• preliminary asset analysis;

• hotel economic valuation;

• business planning;

• review of the operating model;

• capex analysis;

• value creation support;

• review of contracts and operating scenarios;

• positioning strategy;

• transaction governance;

• development of the industrial plan.

The objective is to transform the hotel into a readable, measurable and sustainable investment, reducing risks that often emerge only after closing.

For further information: www.hotelmanagementgroup.it

Roberto Necci - r.necci@robertonecci.it

This article is provided for information and hotel investment analysis purposes only. It does not constitute legal, financial or tax advice.