Our client—a Private Equity investment fund— retained our services to identify risk factors and opportunities that could impact the profitability of his co-investment in a pan-European hotel fund.
Sentinel Hospitality assigned an expert hotel valuer to the client’s project team. Our support focused on the following points:
- Defining the comparable factors to be used for each hotel
- Validating supply and demand growth assumptions
- Validating the value creation levers identified through Top Line (revenue) and Bottom Line (operating costs) analysis of the operating accounts
- Analysing the proposed CapEx projects regarding their relevance to the cash flow improvement objectives
- Validating the appropriateness of the proposed exit strategy, regarding the holding period and exit value
- Validating within the management contract the levers that ensure effective Asset Management (performance clauses, competitive set of performance indicators, content of the documentation and transmission frequencies).
Added value generated
By working closely with our client’s project team and other stakeholders (fund manager, Asset Manager, Hotel Management Company), Sentinel Hospitality helped adjust the client’s equity investment by providing the elements that enabled the modification of the value creation strategy initially proposed by the Asset Manager. Two years later, the IRR achieved after disposal of most of the assets exceeded 15%.