Asset class hotel

Hotel real estate: property and operation belong together.

We assess hotels, serviced apartments and boarding houses not only on location and floor area but on operator, contract and trading metrics – because that is where the value sits.

Services

What we do for hotels

Three mandate types make up most of our hotel work. Usually they are connected: finance needs an operator, and a sale needs both documented properly.

Development finance

New build, conversion, refurbishment or repositioning: we structure the capital side from site acquisition through to opening. Senior, whole loan, mezzanine — whatever the project and the business plan can actually carry. With hotels, lenders look hard at two things: the operator contract and the ramp-up curve of the first three years. We prepare both so they survive the credit committee.

›Acquisition, construction and capex in one structure
›Lease or operator agreement as the basis
›Bridge funding through to stabilisation
›Hedging and covenants negotiated realistically

Operator search

Without the right operator a hotel is just a building with a lot of bathrooms. We approach brands, franchisees and independent operators directly, collect comparable offers and negotiate rent, term, options and security. Including operator changes during live operation — the delicate case, and one that has to stay discreet.

›Brand and operator network across Germany, Switzerland and Europe
›Lease, management or hybrid side by side
›Covenant checks, parent guarantees, deposits
›Re-letting and operator replacement

Sale

We sell single assets and portfolios — off-market to a closed circle of investors, or through a structured bidding process when competition drives the price. Preparation takes more work than in other asset classes: trading figures, STR benchmarking, FF&E condition and the contract position all need to be documented properly, otherwise the price erodes in due diligence.

›Off-market or structured process
›Data room including trading and lease data
›Buyer approach across Europe
›Support through to notarisation and handover

Segments

Hotel types in detail

Each segment has its own earnings logic, its own buyers and its own traps.

Lobby of an upscale hotel at dusk — AI-generated

Business & conference hotels

Locations tied to trade fairs, airports or city centres. Weekday occupancy and corporate rates drive earnings far more than the star rating.

›Corporate and MICE demand
›Mon–Thu occupancy as the core value
›Meeting space as extra income

Serviced apartments & boarding houses

Long-stay concepts with a low cost base and stable occupancy – currently the most sought-after hospitality segment among investors.

›Stays from seven nights
›Lean operating cost structure
›Close affinity to residential use

Budget & economy hotels

Standardised brands with a clear cost structure and mostly creditworthy tenants – predictable, but sensitive to payroll and energy costs.

›Branded tenant with covenant
›High standardisation
›Efficient use of floor area

Resort & leisure hotels

Seasonal earnings curves and heavy maintenance, but strong market positions. Always value across several seasons, never on a peak year.

›Seasonality built into the model
›FF&E reserve is mandatory
›Location monopoly as value driver

Lifestyle & boutique hotels

Concept-driven houses with strong F&B margins but high operator dependency. Here the operator contract is the real asset.

›F&B share of revenue
›Operator commitment and brand
›Refurbishment cycle of 7–10 years

Conversion & repositioning

Standing hotels without a future turned into residential, student or long-stay use – or offices converted into hotels where the location fits.

›Check planning law and parking
›Floor plan and riser feasibility
›Capex assumed realistically

Operators

Contract models and what they mean

Lease agreement

Fixed or turnover-based rent. Predictable cash flow for the owner while the operator carries the trading risk – covenant and parent guarantee decide.

Management agreement

The owner takes the operating result, the operator runs the hotel for a fee. More upside, but full market risk and reporting effort.

Hybrid model

Fixed rent plus turnover share – common in repositionings when both sides should share the ramp-up phase.

Franchise & brand

Brand affiliation without changing operator. Adds distribution and booking volume, costs fees and requires brand standards.

Metrics

What buyers and lenders look at

RevPAR & ADR

Revenue per available room and average daily rate – benchmarked against the competitive set (STR report), not against wishful numbers.

GOP & GOPPAR

Gross operating profit as the basis for a sustainable rent: as a rule of thumb the rent should sit well below sustainable GOP.

Rent cover ratio

Operating result relative to rent. Below 1.3 it becomes tight for both lenders and the operator.

FF&E reserve

3–5% of revenue for furniture and refurbishment. Without the reserve, deferred capex hits the price at exit.

Illustrative benchmark – upscale city hotel

RevPAR€ 95

Revenue per available room – the key earnings metric

ADR€ 138

Average daily rate against the competitive set

Occupancy69 %

Annual occupancy, seasonally smoothed

GOP margin38 %

Gross operating profit before rent and debt service

Process

How a hotel mandate actually runs

Step 011–2 weeks
Location and market analysis
We build the competitive set ourselves rather than take the operator's list at face value. On top of that: demand segments, the pipeline of planned hotels nearby, and an occupancy assumption that survives a weak year. Where STR data is thin, we work through booking platforms and conversations with local houses.
- Competitive set and STR benchmark
- Demand: corporate, MICE, leisure
- Pipeline and supply pressure
- Occupancy and rate scenarios
Step 022–3 weeks
Operation and contract review
With hotels the lease or management agreement is the real valuation object. We read term, extension options, indexation, maintenance obligations and termination rights together — and test whether the operator's covenant and any parent guarantee actually support the rent.
- Term, options, indexation
- Covenant, guarantees, deposits
- Owner vs. operator maintenance split
- Change-of-control and exit clauses
Step 031–2 weeks
Valuation
We run the income approach off a sustainable GOP, not the best year on record. Rent cover, FF&E reserve and any deferred capex come off as a discount. Comparable transactions round it out — rarely a clean match in hospitality, which is why we quote a range instead of a single number.
- Sustainable GOP, not a peak year
- Rent cover and sensitivities
- Capex and FF&E discount
- Price range instead of wishful thinking
Step 044–10 weeks
Operator search and negotiation
We approach brands, franchisees and independent operators directly — usually under NDA and without the address in the first step. Then we make the offers genuinely comparable: headline rent says little when term, ramp-up and maintenance obligations differ.
- Anonymised first approach
- Comparable offers, not a single conversation
- Lease, hybrid or management side by side
- Negotiation through to signing
Step 054–8 weeks
Financing
Senior, whole loan or mezzanine for acquisition, refurbishment or repositioning — usually with a separate capex line, because hotels need investment in cycles. We go to market with a finished credit package: trading figures, contract position, business plan and sensitivities in the format credit committees expect.
- Acquisition, construction and capex lines
- Term sheets compared
- Covenants and hedging
- Realistic conditions precedent
Step 066–12 weeks
Transaction and handover
Off-market to a selected circle, or a structured process when competition drives the price. After notarisation comes the part most people underestimate: operations, inventory, staff, live bookings and licences all have to transfer cleanly, otherwise the buyer starts with friction.
- Data room with trading and lease data
- Due diligence closely managed
- SPA and notarisation
- Inventory, staff, booking pace

Discretion

In hospitality, confidentiality decides the price.

A hotel is not an empty office block. The moment word gets round that the asset is for sale or the operator is changing, people react: staff start applying elsewhere, corporate clients delay their rate agreements, tour operators hold back allotments, and local competitors use the uncertainty in their own sales pitch. What you lose there never comes back through the purchase price — those quarters end up in the data room.

So hotel mandates run in two stages: anonymised first approach without the address, detailed documents only after an NDA and only to parties we consider serious. Site visits look like ordinary appointments, not a buyer tour with clipboards. Who is informed and when — operator, general manager, key staff, lender — we agree upfront instead of leaving it to chance.

Anonymised teaser

First approach without the address and without photos that give the house away. Anyone genuinely interested signs an NDA before the detail goes out.

Short buyer list

Fifteen fitting addresses beat a hundred forwards. Every extra copy of the documents raises the odds the process becomes market talk.

Communication plan

Who hears what and when — general manager, key staff, operator, lender — is part of the mandate, not something that sorts itself out after the first rumour.

Viewings in live operation

Appointments outside peak hours, no entourage, no plant-room tour in front of the whole team. Guests notice nothing.

„You do not buy a hotel by the square metre. If you do not understand the operator contract, you are buying risk and calling it yield.“

Sabiene Münch · Managing Director, Fox Capital

Selling, buying or re-letting a hotel?

We review property, operation and contract confidentially and with an open outcome.

Get in touch