Why Distressed Hotel Assets Present a Rising Investment Opportunity

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Dr. Sabine Schaffer, Managing Director of Pro-invest International Asset Management, recently shared her professional insights with Preqin across a wide range of topics, from why this is an opportune time to consider investing in distressed assets to post-pandemic reset and recovery and the critical role ESG will play in the future of the hospitality industry being a few highlights.

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AFR – ‘Decent returns’ as holidays pick up

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Larry Schlesinger:

Hotel investors will be rewarded with “decent returns” over the medium to long term, as the hotel sector recovers from the harsh effects of COVID-19, according to Sabine Schaffer, head of international asset management at Pro-invest Group.

Having raised $300 million for its second Australian Hospitality Opportunity Fund, including an equity investment from the Australian government’s Ocean Energy Finance Corporation, Ms Schaffer said the pandemic had created a “temporary bump in the road” for hotels compared to the “accelerated structural shift” in retail as seen in the rise of online shopping.

“COVID was a significant bump on the road with very negative consequences for many hotel operators,” Dr Schaffer said. “But I believe people will want to travel. It’s not natural to stay in your two-bedroom apartment and be locked up.

“Look at somewhere like China, where the average hotel occupancy rate is now back in excess of 55 per cent and domestic airline traffic is back at 90per cent”

The second hospitality fund will drive the expansion of Pro-invest’s portfolio of Holiday Inn Express hotels in Australia and New Zealand, which it has been developing under an agreement with Intercontinental Hotels Group since 2013.

The group will also expand into the upper-mid-scale segment with the development of a series of voco hotels, also under an agreement with IHG, with the capacity to also acquire distressed hotels and reposition them.

Pro-invest has already secured four strategic sites, which will see the development of close to 1000 rooms in Auckland, Sydney and the Sunshine Coast

Ms Schaffer said Pro-invest’s focus on developing select service Holiday Inn Express hotels in locations “carefully chosen for their demand drivers” would ensure they rebounded more quickly than full-service five-star hotels, where breakeven points are much higher.

“Over the medium to long term we expect to show some decent returns for investors,” Ms Schaffer said.
Like other hotel operators, Pro-invest was hit hard by the pandemic with occupancy “falling off a cliff” from rates of 75-80 per cent recorded in January and February.

The group also had to temporarily close a number of hotels, while its $300 million raising was delayed by about nine months.

‘We are starting to see things improve. Our Newcastle Holiday Inn Express was seeing occupancy at
55 per cent while at our other hotels it’s around 3o-40 per cent,” Ms Schaffer said.

Original Article 2020-10-28
Credit: AFR Investors promised ‘decent’ returns after CEFC backs $300m hotel fund

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Pro-invest opens first Holiday Inn Express airport hotel in Sydney

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Doors will open to the newly constructed Holiday Inn Express Sydney Airport this month, welcoming the increasing number of Trans-Tasman arrivals and domestic travellers with the establishment of specific travel bubbles.

The 247-room, 8-storey hotel is conveniently on the doorstep of Sydney’s domestic airport terminal and is only minutes away from the international terminal, providing hassle-free stays to business and leisure travellers with early departures or late arrivals.

Located in Mascot, Sydney’s CBD is just two train stops away, while providing easy access to many of Sydney’s top sporting grounds such as the Sydney Cricket Ground (SCG) and Randwick Racecourse.

Inspired by the locale, the aeronautically themed hotel’s entrance lobby features two large vintage propellers, the backdrop of guest lifts is inspired by wayfinding signage in an airport terminal, the gym and meeting room walls are reminiscent of runways, and the hotel has its own ‘business lounge’.

The airport motifs continue throughout the hotel’s room designs, with bathroom shower screens printed with airport arrival and departure signage.

Each room at Holiday Inn Express Sydney Airport features everything the smart traveller needs – power showerheads to freshen up, a choice of pillows, black-out blinds and high-quality bedding for the perfect night’s sleep, and free uncapped Wi-Fi to catch up on news and reconnect with family and friends.

Hotel facilities also include two meeting rooms, flexible workspaces, free business centre, self-service laundry and on-site carparking.

Holiday Inn Express Sydney Airport officially opens for stays from Tuesday 27 October.

Ronald Barrott, Chief Executive Officer of Pro-invest Group, said the Group’s first airport hotel was well-positioned for the return of international and domestic travel.

“With the Trans-Tasman travel bubble established between Sydney and New Zealand, and international arrivals increasing, we expect demand for this type of accommodation to grow,” he said.

“Sydney also has a reputation as a premier holiday destination both domestically and overseas and is a hub of business activity for corporate travellers.

“Just two quick stops from the city’s CBD, well-equipped with leisure and business facilities, and a short walk to the terminal – we are confident that our Sydney Airport hotel will be a very attractive accommodation option for a range of travellers.”

Mr Barrott said hotels provided the safest, cleanest accommodation option as the nation recovers from the COVID-19 pandemic.

“Travellers need not be concerned about hygiene during their stay with us – we have been redesigning the guest experience in response to the current climate and consumer expectations of health and safety,” he said.

“Science-led protocols as well as elevated cleaning and service measures have been introduced at our Sydney Airport hotel, as they have at all Pro-invest Group properties.

“This includes deep cleaning with hospital-grade disinfectants, possible face mask requirements, various ways to reduce contact throughout the hotel such as cashless payments, and social distancing measures within public spaces.”

As part of IHG , guests will also stay assured with the IHG Way of Clean program, refined in partnership with industry leading experts Cleveland Clinic, Ecolab and Diversey – including the IHG Clean Promise to give guests greater confidence and hotel teams the protection needed.

Holiday Inn Express Sydney Airport’s Hotel Manager, Stephanie Roach, said her team was looking forward to showcasing what smart, simple travel was all about.

“Our rooms provide guests with everything they need to make them feel at home, even when they’re away,” she said.

“With Grab & Go breakfast options and snacks, beverages and barista made coffee available 24/7, travellers with early departures and late arrivals will appreciate the convenience our hotel offers.”

Holiday Inn Express Sydney Airport is the seventh Holiday Inn Express hotel opened by Pro-invest Group, since 2016, following the launch of Sydney Macquarie Park, Brisbane, Adelaide, Newcastle and Melbourne Southbank hotels in Australia, and Queenstown in New Zealand.

Pro-invest Group operates the Holiday Inn Express hotels, one of the world’s largest and fastest growing mid-scale brands, in Australia and New Zealand under a franchise agreement with InterContinental Hotels Group (IHG).

Pro-invest Group recently announced the closure of their second Australian Hospitality Opportunity Fund (Fund II). Fund II’s A$300m commitments will continue to focus on the expansion of the Holiday Inn Express footprint in Australia and New Zealand, along with targeting other opportunities presented by the current market environment.

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Pro-invest announces ESG milestones with FYE 2020 Annual Sustainability Report

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Pro-invest Group is pleased to present its third Annual Sustainability Report. With another financial year behind us, this Report discloses the sustainability milestones achieved by Pro-invest Group and its hotel portfolio, coupled with detailing the Group’s efforts, impacts and progress in relation to Environmental Social Governance (ESG) during the Financial Year Ending 2020.

In a commitment to increased ESG transparency, the Report is partially aligned to the Global Reporting Initiative (GRI) Standards, Core Option and for the first year, Pro-invest commenced reporting against the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations.

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Pro-invest Group Closes its second Hospitality Fund at A$300 million

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Sydney, Australia – Pro-invest Group, a global investment firm specialising in private equity real estate and real estate asset management with commitments totalling A$2 billion, today announced the closing of its second Australian Hospitality Opportunity Fund (“Fund II”). This closure is a result of significant fundraising that secured A$300m from a diverse group of institutional investors.

Fund II is the successful successor of Fund I, Pro-invest’s debut Australia and New Zealand focused private equity real estate fund. These two funds follow a number of successful investment vehicles managed by Pro-invest in numerous geographies – including Europe and the Middle East – over the past three decades.

Fund I focuses on the strategic roll-out of a portfolio of Holiday Inn Express hotels – one of the world’s largest and fastest growing select service brands – across Australia and New Zealand via a Master Development Agreement with InterContinental Hotels Group (IHG). Out of the eight properties spanning more than 2,000 rooms, six have achieved practical completion. The other two hotels are expected to open in the next 12 months.

Fund II’s A$300m commitments will similarly focus on the expansion of the Holiday Inn Express footprint in Australia and New Zealand as well as tapping into the upper mid-scale segment with voco™ – the newest lifestyle brand by IHG. Fund II can also be deployed to reposition existing assets, targeting opportunities presented by the current market environment.

Holiday Inn Express and
voco – Auckland

Fund II has already secured four strategic sites, which will see the development of close to 1,000 rooms in Auckland, Sydney and the Sunshine Coast under the Holiday Inn Express and voco brands. This progress highlights continued investor confidence in the performance and resilience of hotels operating in the mid-market, select service segment – even in soft market conditions.

Holiday Inn Express Sunshine

With two sites in Auckland, this further strengthens Pro-invest’s presence in New Zealand following the Group’s market entry with the opening of Holiday Inn Express & Suites Queenstown in July this year.

Holiday Inn Express & Suites
Queenstown

Fund II hotels are expected to commence operations in 2022. When factoring in the normal two to three years required for trading to ramp up, Pro-invest does not expect material impact on the performance or asset valuations of these properties as a result of COVID-19.

Similar to Fund I hotels, hotels under the Fund II portfolio will also comply with Pro-invest’s industry-leading ESG practices. Pro-invest is laser-focused on systemising sustainability initiatives across the lifecycle of each operating hotel by continuously and efficiently adopting appropriate measures to reduce its overall environmental footprint.

Fund II is partially backed by an equity investment from the Clean Energy Finance Corporation (CEFC) – which invests on behalf of the Australian Government to lead the market, operating with commercial rigour to address some of Australia’s toughest emissions challenges. With CEFC support, Fund II’s hotels will target a 5-star rating under the National Australian Built Environment Rating System (NABERS), with the aim to deliver lower emissions and dramatically reduce energy costs for operating hotels. The holistic approach to minimise environmental impact through sustainable design and construction can make hotels more attractive to energy-conscious guests, more efficient in the face of rising energy prices, as well as ultimately improving their value by making them more resilient to climate change.

Fund II will also have its own Net Zero 2030 strategy to reach zero emissions by the end of the decade. Other ESG-centric initiatives include considerations for sustainable transportation and alignment to the Task Force on Climate-related Financial Disclosures (TCFDs).

“We are pleased to have raised such a significant fund, with a diverse group of international and domestic investors, in an otherwise challenging period. We are seeing – and are well positioned to capture – emerging opportunities across dislocated markets. In particular, we anticipate more distressed opportunities arising over the next 6 to 12 months. As an integrated platform combining hotel investment, development and operational capabilities, we are uniquely placed to optimise these opportunities in existing, new and redevelopment assets and generate significant value for investors,” said Ronald Barrott, CEO of Pro-invest Group.

“We are optimistic about early signs of travel recovery, particularly in the select service segment where we tend to focus our investments in. We are also responding to the current situation by transforming our business model to better serve the needs of our guests in this new reality, and taking this time to accelerate our sustainability initiatives and strengthen our ESG credentials.”

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HIE & Suites Queenstown – Development of the Year – Hotels & Accommodation Finalist

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Our newly opened Holiday Inn Express & Suites Queenstown has been listed as a Finalist for the ‘Development of the Year Hotels & Accommodation’ award by the Urban Developer!

Holiday Inn Express & Suites Queenstown is strategically positioned to capitalise on and compliment the region’s natural beauty and has been uniquely designed in combining abstract elements which represents ice and rock to pay homage to the hotel’s landscape history and achieve a design that fits with the surrounding urban environment.

We’re looking forward to the Urban Developer’s Winner’s Month to find out which of the Finalists will be taking home the title of Winner.

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ESG in Focus in Midst of Pandemic – Pro-invest’s NABERS Rating Portfolio White Paper

As Australia continues to deal with the current pandemic – particularly its embattled hospitality sector – there is a looming crisis that should not be overshadowed: climate change.

Water and energy consumption in hotels have come under greater scrutiny in recent years, particularly as environmental concerns and demand for sustainable, responsible businesses have significantly increased.

The NABERS hotel tool assists property owners and managers in obtaining a third-party assessment of their hotel’s energy and/or water consumption.

With 7 active NABERS ratings across Energy and Water ranging between 4.5-stars to 5-stars and many more to come, Pro-invest Group is a strong advocate for the adoption of the NABERS scheme. While we have not been spared from the impact of Covid-19, this has not eroded our focus in and commitment to sustainability. We know that strong ESG credentials have the ability to reduce costs, increase asset attractiveness for stakeholders and improve resiliency, and this will continue to underpin our strategic approach.

In this white paper we detail why it’s important that sustainability efforts remain a critical strategic agenda even in the midst of this pandemic.

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Pro-invest in the Press: AHICE 2020 Sydney Morning Herald

Holiday Inn Express Sydney Mascot

Pro-invest in the Press: AHICE 2020 assembled a line-up of hotel industry veterans and esteemed speakers from all around the world, including our CEO Ronald Stephen Barrott.

Holiday Inn Express Sydney Airport

Read full Article Here (Click)

Sydney Morning Herald did a great round-up of some of the key themes discussed on Day 1 of the conference, with Ron’s remarks featured alongside other industry leaders.

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HM August: Development Update – Ronald Barrott, CEO Pro-invest Group

These are extraordinary, uncertain times – but one thing we are sure of is that midscale and select service hotels are more resilient and perform well against their peers during a downturn. Our development pipeline will continue to reflect this, underpinned by our commitment to sustainable growth as well as continued value protection and generation for our stakeholders.

Read Full article below

HM August 2020 :Page 56 

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Collaboration is a Must for Driving Sustainability across the Nation

Screen cap of NABERS 2020 Panel

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Planning, developing and operating for sustainability is not done in isolation. It’s a purpose-driven journey requiring continuous collaboration across a range of stakeholders and sectors.

We’re proud to be using NABERS as part of our sustainability framework and enjoyed watching the recaps of Dr. Sabine Schaffer along with Australia’s industry leaders speaking on the plenary session ‘Why it takes a village to raise a sustainability nation’ at the NABERS + CBD Conference.

If you missed the conference or want to view the sessions again, below for the NABERS + CBD Conference recordings.

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