Your new role will be to add some very specialised hotel investment into the mix. But what exactly is Resolution’s investment strategy for the hotel sector? Is there a figure allocated by Resolution to invest in the hotel sector in 2011?
We’ve not allocated a figure for hotels per se, but would be looking for individual assets of between £50m and £100m each, to complement our ongoing investment in other property sectors.
The strategy is to seek out interesting deals with strong asset management potential across a range of property uses throughout Europe, including retail, offices, hotels and mixed-use schemes.
Where would you say are the hotspots for the hotel sector at present?
Some markets are too hot, in our view, so we are being very selective. We’re wary of the luxury sector, which has become extremely pricey. We’re also concerned about current supply level of budget hotels in some markets, which also don’t offer the lot sizes we are looking for.
Resolution has invested in both Berlin and London hotels. Are you more focused on capital cities?
Ours is an urban investment strategy, so hotels in capital cities are naturally very attractive to us.
The Paris hotel sector continues to see investment from Middle Eastern investors. Is it possible to compete in the French capital?
The five-star luxury market in Paris is highly competitive. We’re not looking to be competing with the trophy asset buyers. Generally, we will focus on the three- and four-star business hotels sector, as part of a wider investment programme.
What about serviced hotel apartments?
Yes, we would consider serviced apartments or extended-stay hotels, especially if these complemented residential, office or retail uses as part of a mixed use strategy.
So mixed-use schemes with a hotel element is of interest?
Absolutely. This allows us to use our cross-sector experience to maximum effect. The precedent is there in Resolution’s existing mixed-use assets, such as Brewery Square in Dorchester, UK, where hotels are an integral part of the residential and retail mix.
How important is an asset’s location within a city?
Transportation links and central locations are key factors in any property investment, but in the hotel market they’re not the only factors. We will also take into consideration the facilities of the hotel and whether it is a demand generator in itself.
Across Europe, the conversion of offices to hotel or residential has increased as the office sector suffered. Is this still a trend or has it now passed?
I don’t think the trend has passed and alternative uses is something Resolution is increasingly interested in. Using active management to reposition buildings and release upside is part of the company’s heritage. Turning a former department store at Torstrasse, Berlin, into a Soho House Hotel is a prime example. Another is the conversion of a car park to residential in Marshall Street, London.
How does your three- and four-star strategy work when you compare standards across Europe? Do you see a difference between a typical London and Berlin hotel in the same class?
In the absence of a unified star rating system across Europe, it’s probably best to describe our strategy as “mid-scale limited service, to upscale”. But our initial plan is to look at the UK market in the first instance.
