Hotel Brands

AGO Hotels expands UK portfolio through acquisition

The group’s hybrid lease structure includes downside protection to ‘guarantee resilience in challenging market conditions’, as well as upside participation to ensure profitability

AGO Hotels has announced it is expanding its UK portfolio through the acquisition of a new hotel in Peterhead, Scotland.

The site is a recent hotel conversion, and has operated under the Travelodge brand since May 2017. Following a successful exchange of contracts, the hotel will operate as a modern 63-bedroom economy hotel. 

AGO Hotels was launched in July 2020 by Lionel Benjamin and Viv Watts, who wanted to “provide an innovative and sustainable platform for hotel asset owners”.

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Its hybrid lease structure includes downside protection to “guarantee resilience in challenging market conditions”, as well as upside participation to ensure profitability. 

In addition, the group reportedly offers hotel owners 25-year FRI lease terms and long-term, low-risk and inflation-hedged cash flows.

AGO’s first secured brand partner is Accor, in a partnership that enabled Accor’s ibis budget brand to act as a hotel operator for hotels within the AGO portfolio, with no involvement in the lease or ownership structure. 

The group also exchanged contracts for nine new economy hotels in November 2020, and reports seeing a “sustained interest” in its hybrid lease structure.

AGO Hotels said: “This is an exciting addition to AGO Hotels’ growing UK portfolio.  The current lockdown is providing a real opportunity for hotel owners to re-evaluate their business models. 

“We are being contacted by asset owners up and down the country, interested in our disruptive lease structure and our combined offer of downside protection coupled with significant profit participation.” 

It added: “The economy hotels sector is best positioned to recover quickly as sector restrictions ease and confidence returns to the market. The AGO Hotels’ team is looking forward to welcoming guests to our new hotel in Peterhead as soon as possible.”

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