Update:
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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.
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.
Download European Hotel Sector: Identifying opportunities for value creation for more insights.
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Risk Considerations
Investing involves risk, including possible loss of Principal. Past Performance does not guarantee future return. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. Potential investors should be aware of the risks inherent to owning and investing in real estate, including value fluctuations, capital market pricing volatility, liquidity risks, leverage, credit risk, occupancy risk and legal risk. All these risks can lead to a decline in the value of the real estate, a decline in the income produced by the real estate and declines in the value or total loss in value of securities derived from investments in real estate. International investing involves greater risks such as currency fluctuations, political/social instability, and differing accounting standards.
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MM13682 | 10/2023 | 3132846-122024