H2I STRUCTURES MILLION-FUND FOR CITY HOTELS WITH REPOSITIONING POTENTIAL

20. Dec 2022

H2i launches hotel transformation fund – GSH becomes operating partner

H2i Asset Management is launching a closed-end hotel real estate fund investing in operator-free hotels with repositioning potential in prime inner-city locations in German A, B and C locations. The H2i “Hospitality Transformation Fund 1” (HTF) is to run for at least 7 years and is aimed at professional and institutional investors. The target volume is 500 million euros. The focus is on hotel properties with an investment volume of 10 to 15 million euros. These will be operated under a uniform brand and management. This highlights value enhancement potential through repositioning, digitization and ESG-compliant refurbishments. A central component of the strategy will therefore be the sustainable use of the property. Development opportunities will be identified at the time of purchase and implemented by both partners.

GSH as operating partner

As a strategic partner, Gorgeous Smiling Hotels GmbH (GSH) will take over the operation of all acquired hotels and act as manager of the hotel operating company. Engel & Völkers Hotel Consulting GmbH (EVHC) had conducted a structured operator search in advance on behalf of H2i. EVHC is also supporting H2i in the fund build-up and further property acquisition.

“The hotel sector is changing. The focus of our fund is on individual hotels facing similar structural challenges. These include the topics of maintenance, digitalization, energy costs or succession issues. Due to our background as a family business, we understand the hardships of owners who have been buffeted by Corona and are now facing new challenges,” says Tilman Hickl, Managing Partner at H2i.. Engel & Völkers Hotel Consulting GmbH already has the first properties in the pipeline today, with the first purchases for the “Hospitality Transformation Fund 1” scheduled for as early as the first quarter of 2023.

Exploiting market opportunities

Compared with similar markets, Germany has a high proportion of individual hotels, while chain hotels are still significantly underrepresented. The majority of owner-managed hotels are family-run, and the hotel operator is usually also the building owner.

Heiko Grote, Managing Partner at GSH: “The challenges for individual hotels have intensified in recent years, especially in cities. Operators and owners are clearly struggling. As an owner-managed company, we understand how to leverage these synergies from operations and ownership.”

“We have brought together two accomplished partners who complement each other perfectly: H2i stands for decades of experience in the investment industry, GSH for expertise as a multi-brand operator with numerous brands and a flair for good locations,” adds Andreas Ewald, Managing partner of Engel & Völkers Hotel Consulting GmbH.

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