A rebounding sector with strategic appeal
Private equity (PE) investment in the UK hospitality and leisure (H&L) sector is experiencing a resurgence. Hotel investment surged by 210% in early 2024, reaching nearly £4 billion in the first 6 months, and according to Savills is forecasted to exceed £4.85 billion in 2025. Across Europe, hotel investment has hit €21.9 billion, a five-year high.
This reflects the sector’s overall role as a key driver of economic growth, contributing billions to GDP and supporting thousands of jobs across the country. Investors are drawn not only to its resilience, particularly post-COVID, but also to its potential for long-term value creation as an ever-evolving sector.
Diverse investment strategies: from granular to grand
PE firms are deploying capital across a wide spectrum of opportunities, from the large-scale acquisitions to smaller granular deals. Recent transactions include:
- Tristan Capital Partners’ €400m acquisition of easyHotel’s portfolio
- Schroders purchase of The W Hotel in Edinburgh for £100m
- KRR £300m investment to PureGym in 2021
All reports cite that the Hotel, Restaurant and Health & Fitness markets are rebounding post-COVID, with PE investment levels increasing. The market is ripe for business owners to consider and prepare their route to investment.
Driving value through operational efficiency
PE firms are known for unlocking value through strategic business interventions. In hospitality, this includes:
- Operation optimisation: Streamlining costs, improving procurement, and enhancing guest experiences via technology and innovation.
- Asset repositioning: Renovating and repositioning properties to unlock premium pricing.
- Brand expansion: Scaling through franchising, portfolio growth, and international reach.
The Global Head of Real Estate Lending at Deutsche Bank noted the attraction for PE to “redevelop things that need to find new life,” highlighting the appeal of underperforming assets with potential for turnaround.
New incentives: Sustainability and tech transformation
Led by current social trends, PE investment increasingly prioritises:
- Eco-friendly operations: Energy efficiency, waste reduction, and responsible sourcing.
- Wellbeing importance: Consumer trends toward the importance of physical and mental health.
- Technology-driven experiences: AI-powered customer service, automated check-ins, and personalised marketing.
- Wellness tourism: Fitness-focused resorts and mindful travel experiences.
What It means to be investment-ready
To secure Private Equity funding, whether for growth or as an exit strategy, hospitality businesses must demonstrate:
1. Financial and Operational Transparency
- Strong, consistent EBITDA margins
- Stable cash flow
- Clear capital expenditure plans
- Intelligent management reporting (e.g., RevPAR, ADR, occupancy trends)
2. Strategic Forecasting and Governance
- Aligned forecasts and budgets
- Monthly board meetings and strategic reviews
- KPI tracking and performance benchmarking
3. ESG and Digital Readiness
- ESG assurance and CSRD compliance
- B Corp certification support
- Tech infrastructure for scalable operations
4. Leadership and Vision
Most importantly, Private Equity firms invest in people. A capable management team with a well-defined strategy is often the most critical factor in securing funding. Ideally with a proven track record and a vision an investor can trust you to deliver going forward to make sure your business is an attractive proposition.
How Menzies supports your investment journey
Menzies offers comprehensive support to help hospitality businesses become investment-ready:
- Outsourced accounting and comprehensive financial reporting
- Commercial software setup and process improvements
- Effective KPI development and performance tracking
- Forecasting and scenario planning
- Strategic growth and investment advice
- ESG advisory and compliance
- Deal advisory and investor engagement
The Outsourced Accounting team can partner with your business to ensure your records are up to date and ready for PE presentation. Our Finance Director Solutions offer business owners and Senior Management teams support and objective feedback on business performance, which can be critical to becoming investment ready.
Our Deal Advisory team can then assist in your “go-to market” strategy, with their vast experience in helping clients to secure funds for business growth and acquisition. The team have a proven track record of enhancing shareholder value, identifying suitable acquisition targets and negotiations with a primary focus on transactions in the range from £3million up to £75million.
Whether you’re a boutique hotel operator or a multi-site leisure brand, Menzies ensures you’re positioned to attract the right investors on the right terms.
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