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European Hotel Sector: Identifying opportunities for value creation

January 23, 2024
Graeme McCormack
Head of Fund Management – Hotel & Leisure Division
Hugo Steen
Head of Investments – Hotel & Leisure Division
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A combination of strong fundamentals and pockets of distress presents unique opportunities for investment in the European hotel sector. (Explore the investment case in detail in our first paper in this series.) Targeting independent hotels that are well located but underperform and require investment offers significant scope to create value through upgrading, repositioning, and improved operations.

In this paper, the second in our European hotel sector series, we share our expertise on finding those value creation opportunities—undervalued or illiquid hotels with good micro locations within attractive markets.

Key takeaways

  • An attractive market is one that has multiple demand drivers, including strong demand for both leisure and business travel, where hotel market performance has been strong and pricing is attractive, and new supply is limited.

  • An attractive property is one that is in a central location with curb appeal, and maintained well enough that any short-to-medium term defensive capex requirements are limited. The property should be on a lot sized for efficient deployment of capital, which is underperforming relative to similar properties in the market.

  • Selecting markets, micro locations, and properties with these characteristics can potentially uncover unique opportunities to create value through upgrading, repositioning, and improved operations.

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