Our hotel investment strategy

Everything you need to know about Our Hotel Investment Strategy

• What is Hospitality Private Equity?

  Hospitality Private Equity involves investing in hotel assets through collective investment vehicles, with the objective of creating medium-to-long-term value.

  In practice, these funds raise capital from Sophisticated Investors (institutions, family offices, HNWIs, etc.) to acquire, renovate, restructure, or reposition hotel assets [1]. The strategy is twofold:

  • Value Enhancement: Increasing asset value through optimized management and targeted CapEx (renovations).
  • Profitable Exit: Divesting the asset to generate a capital gain, thereby delivering a return on investment [4].

  This type of investment typically follows a “Value-add” or “Opportunistic” logic [2], depending on the level of intervention required (refurbishments, operator changes, marketing repositioning, etc.).

  At Extendam, this strategy is underpinned by a triple expertise:

  • deep-dive knowledge of the European hotel market,
  • operational hospitality asset management [3],
  • and the capacity to structure bespoke deals with local or international operating partners.

  [1] Hotel Asset: Real estate property operated as a hotel, generating revenue through accommodation, catering, and ancillary services.

  [2] Value-add / Opportunistic Strategy: Private equity strategies involving active intervention on the asset to drive value (renovations, operator changes, etc.), as opposed to a “core” strategy (stabilized assets).

  [3] Hospitality Asset Management: Strategic management of a hotel asset to optimize profitability and valuation (operator selection, budgetary control, commercial positioning).

  [4] Return on Investment (ROI): The gain realized relative to the capital invested, following divestment or income distribution.

  Note: Past performance is not indicative of future results. Hospitality Private Equity involves specific risks, including the risk of capital loss and illiquidity. It is strictly reserved for Sophisticated Investors.

• How do you evaluate a hotel’s profitability?

  A hotel’s profitability is assessed using several operational and financial KPIs. It primarily depends on three major factors: occupancy rate [1], Average Daily Rate (ADR) [2], and operational cost control. These elements allow for the calculation of a central metric: RevPAR [3], the essential foundation of hospitality performance analysis.

  Analysis of Key Indicators:

  • Occupancy Rate [1]: Measures the percentage of rooms occupied over a given period. A strong occupancy rate reflects sustained demand and the establishment’s attractiveness.
  • Average Daily Rate (ADR) [2]: A key hospitality metric representing the average revenue generated per occupied room for a given night. It is calculated by dividing room revenue by the number of rooms sold. ADR evaluates pricing performance and helps optimize revenue strategies.
  • RevPAR (Revenue per Available Room) [3]: The average revenue generated per available room, whether occupied or not (Formula: Occupancy Rate x ADR). It provides a synthetic view of the hotel’s commercial performance.

  Operational Profitability: Beyond room revenue (RevPAR), ancillary income (F&B, seminars, spa, etc.) is added to reach Total Revenue. Operating expenses (OPEX—wages, energy, maintenance, marketing, etc.) are then deducted to obtain the EBITDA [4], the industry-standard indicator for asset profitability.

• What types of hotels does Extendam prioritize for investment?

  Extendam focuses primarily on 2 to 5-star hotels (excluding budget hotels and palaces), which represent nearly 93% of the European hotel landscape [Source: INSEE, Eurostat, MKG]. This segment offers an excellent compromise between traveler appeal, profitability potential, and value-creation levers.

  We favor establishments in well-connected urban or peri-urban centers benefiting from a dynamic economic fabric or high tourist footfall. These hotels must meet a dual strategic criterion: a balanced mix of business and leisure guests (to smooth occupancy year-round) and a positioning capable of driving strong RevPAR.

  Our targets are often independent or underperforming assets with potential for repositioning, renovation, or upscaling. We prefer assets that can benefit from a change in operator or an affiliation with a recognized brand (via franchise or soft brand contracts). This approach rapidly improves visibility, e-reputation, and commercial performance across major European markets.

• How much do you need to invest in a hotel?

  The investment amount varies considerably based on the size, location, and category of the hotel. For a mid-sized hotel in Europe, the total investment can range from a few million to several tens of millions of euros. At Extendam, we provide investment solutions tailored to different investor profiles.

  Note: Past performance is not indicative of future results. Hospitality Private Equity involves specific risks, including the risk of capital loss and illiquidity. It is strictly reserved for Sophisticated Investors.