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Investment strategy
European Hotel Capital will acquire a portfolio of mid-size, mid-level hotels,
located in inner cities with a more or less fixed hotel room supply. The sellers
are most likely family owners that have an urgency to sell. The acquisitions
will encompass both the hotel operating company and the real estate. Gateway
cities in Euro countries with a sound hotel supply and guest demand situation
are amongst the investment criteria.
The fund will execute a turnaround and an upgrade program that will result in a sustainable higher cash flow level and an improved strategic position for both operation and real estate. After a successful conversion, the fund will exit grouped portfolio companies or single assets to specialised and professional hotel investors and hotel operators.
Before the acquisition of an investment project, a specific value creation strategy and clear exit path will be defined. Investment decision making and portfolio management will be supported by a tailor made risk management tool.
Value growth will result from four factors: substantial and sustainable increase in free cash flow, improved strategic position of the hotel, optimisation of the leverage structure and clustering of single assets into pre-packaged portfolios.
The current downturn in the industry business cycle makes selling owners even more urged to sell and offers excellent opportunities to invest on attractive terms.
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