The Fund's growth strategy is focused on achieving a stable return and increasing the size of the Fund by acquiring, managing and adding value to hotel investment properties in the Netherlands. The Fund seeks high-quality investments through active portfolio management and aims to maintain a core risk profile without leverage. Risk allocation plays an important role in maintaining the core characteristics of the Hotel Fund, which aims to achieve a long-term annual total Fund return of 7%.
This stable return is ensured by four different strategic pillars:
Investments are made in core hotel properties, mainly large hotels with a star rating, located in the four most attractive cities for hotel accommodation (Amsterdam, Rotterdam, The Hague and Utrecht)
Collaboration with strong brands and operators provides security
Aiming for a stable basis of fixed rental income flows at Fund level
Investing in a diverse range of hotel concepts aimed at different target groups
Investments in hotel real estate have several advantages over other real estate investment sectors, including:
Lease agreements are often long term (20-30 years)
The lessee has a real stake in the style and proper upkeep of the building and the fixtures and fittings.
Reliable tenants of strong brands/operators provide stable returns.
Vacancies are rare.
Conversely, the value of the property shows a strong correlation with the success of the operation.
The hotel market has several specific characteristics. These will be taken into account as the Fund expands, when the focus will be on ensuring control over the investment risks arising from the characteristics specific to investing in hotels.
Active asset management
Compared with other real estate sectors, the tenant/lessee plays a much larger role in the real estate management in the hotel sector. For instance, the lessee itself is responsible for most technical matters. This high level of involvement is seen as an advantage.
The focus of the Fund’s active asset management approach is mainly on:
drawing up and executing multi-year maintenance budgets for the building, including technical installations;
working out and executing plans to improve the turnover potential of the leased object (hotel). Examples include the expansion of the restaurant at hotel CASA 400 and the redesign of the public areas around hotel Aitana.
monitoring trends and developments in the hotel market, in combination with analysis and assessments of hotel operating results and prognoses. During regular consultations with its hotel operators, the Fund discusses trends and developments in the hotel market, giving the operators the opportunity to explain how they plan to respond to these trends and developments.
All activities are carried out in close cooperation with the hotel operator.
It is possible to benchmark hotel operating results, as there is a good deal of data available. On the other hand, this data is frequently only available as an average of a number of selected hotels. In other words, it is often not possible to obtain the occupancy rate of a particular hotel, but it is possible to obtain the average occupancy rate for an average of four hotels. The comparison of the hotel operating result of a hotel in the Fund with a selection of the most competitive hotels can serve as a good basis for negotiations with a hotel operator.
Bouwinvest considers investments in sustainability from a business perspective. Energy-efficiency measures improve the competitive position of the Fund’s properties and add value for our stakeholders, both investors and tenants. However, Bouwinvest’s sustainability strategy extends beyond energy use to the social aspects of sustainability. Corporate Social Responsibility (CSR) and energy efficiency play an increasingly important role in the hotel market. The hotels in the Fund use thermal storage systems to supply heating, cooling and hot tap water. CASA 400 has been awarded Golden Green Key status. The Green Key is an international eco-label for businesses in the tourism and recreation industry and for meeting and conference venues with a major focus on sustainability. There are three levels: bronze, silver and gold.
Bouwinvest uses the BREEAM-NL instrument to measure and assess the overall sustainability of its buildings. We strive to achieve a BREEAM-NL Good rating for every asset in the portfolio. Consequently, the new-build projects acquired in 2016, Premier Suites and Boot&Co, will receive BREEAM certificates.
Sustainable use depends very much on the policy of the hotel operator. Large international hotel chains have drawn up an extensive CSR policy that also adds to the value of the real estate. In addition to paying attention to energy, waste and water management and the use of materials, hotel operators are now increasingly developing policies that take into account issues such as biodiversity, disease prevention and food safety.