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The Fund’s growth strategy

The Hotel Fund's strategy focuses on achieving stable returns 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. The Fund aims to maintain a relatively low and medium risk profile and the Fund has no leverage. The risk allocation plays an important role in maintaining the core characteristics of the Hotel Fund, while aiming to achieve a long-term annual total Fund return of 6.5%. This stable return is ensured by four strategic pillars:

  1. We invest only 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);

  2. We collaborate with strong (international) brands and operators, which provides sufficient security;

  3. We aim for a stable basis of fixed rental income flows at Fund level;

  4. We invest in a variety of hotel concepts aiming at different target groups. To invest in buildings with a lease agreement rather than a management agreement.

Investments in hotel real estate have several advantages over other investment categories, including:

  • lease agreements are often long term (15-25 years);

  • the lessee has a real stake in the style and proper maintenance of the building and the premises;

  • reliable tenants of strong (international) 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 in the 2016-2018 period, when the focus will be on ensuring control over the investment risks arising from the characteristics specific to investing in hotels.

Managing hotel real estate investment risks

Sector-specific knowledge

Because the return on an investment in hotel real estate is strongly dependent on the operational result of the hotel business, the Fund uses the following guidelines to manage the risk of disappointing hotel operations and any negative impact on the Fund’s return.

  • The Fund prefers to invest in hotels managed by management companies operating in multiple regions.

  • The location of the hotel remains a key factor. Hotels in good locations are never empty.

  • The hotel should attract a healthy mix of leisure and business guests. A hotel that serves both of these target groups has the advantage that it tends to achieve good occupancy levels during the week and at weekends. On top of this, the private market is less sensitive to economic developments (especially as far as hotels in the city are concerned).

  • The Fund aims for diversification in the composition of the portfolio by investing in different and distinctive concepts that focus on specific target groups. For instance, budget hotels for groups, young guests and families (Meininger Hotel) and extended stay hotels for young professionals who regularly travel for their work and stay in a city for between five nights and 12 weeks (ZOKU). Another example is the CASA 400 hotel in Amsterdam, which has 520 rooms (hotel rooms and student housing), restaurant and bar, congress facilities, parking and a student lounge.

  • The Fund aims to generate a substantial share of its hotel income – at Fund level – from long-term lease agreements with fixed, index-linked rents.

  • Strong guarantees from lessees provide additional security.

  • The Fund cooperates with professional management companies with star-rated hotels, which on average score better.

  • The Fund supervises and exerts as much influence as possible on (reserves for) lessee’s effective upkeep of the hotel’s fixtures and fittings (FF&E).

  • The Fund focuses on lease agreements (minimum 50% of the total rental income), so that the operating risk is not borne by the investor. Nonetheless, in the case of variable rents the operating income may affect the direct return, although it can also lead to a higher return. This risk is mitigated by investing in hotels with a proven track record and active asset management. It should be noted with regard to the Fund’s growth target that there is a growing shift away from fixed-rent leases, especially for the best hotel propositions. The advantage of a variable rent component for the lessee is that it needs to account for less lease obligations on its balance sheet. International hotel chains now tend to favour management contracts. Although this may lead to more rental income fluctuations at asset level, the composition of the portfolio currently provides a good deal of stability, as all the hotels in the Fund, including the transactions realised in 2015, involve fixed, annually-indexed rents.

  • During regular consultations with the hotel operators, the Fund’s management discusses the trends and developments in the hotel market and the operators can explain how they plan to respond to these trends and developments.

Active asset management

Due to the fact that hotel real estate is largely subject to long-term leases and any improvements to the building and fixtures and fittings are in principle for the account of the lessee, the Fund’s active asset management approach is largely focused on the monitoring of 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 and the operators can explain how they plan to respond to these trends and developments.

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 consultations with the hotel operators.


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, in 2016 we will start with an assessment of assets on the basis of BREEAM to determine scores and identify potential improvements that extend beyond the reduction of energy use, so we can assess and execute these measures if they are (financially) justified.

For 2016 the Fund has defined the following CSR targets:

  • Recording standard procedures of sustainability issues when purchasing new assets;

  • Monitoring energy levels and improving energy consumption patterns;

  • Reducing EPC levels and improving energy labels;

  • Purchasing green electricity.

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.

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