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Insight Comment |
A few weeks ago European travel giant TUI Group announced the launch of a new hotels fund in partnership with investment firm Hansainvest.
The new vehicle, which has a gross target of €500 million, has already signed up an unnamed German pension fund for a “significant share”.
For TUI all this represents a pretty big step. A couple of years ago the company made the decision to move to an asset light approach to property. Since then it has sold its stake in RIU Hotels as well as relinquishing full ownership of the Nordotel chain.
But that doesn’t mean it has given up on its hotels division. Far from it. Instead TUI is using a couple of other levers. One is franchising through its TUI Blue brand, which has grown from around 10 hotels in 2019 to more than 100. The other is this new hotels fund.
Speaking on a call with analysts after the release of the company’s Q1 results, CEO Fritz Joussen said that TUI was trying to find a way to expand its differentiated holiday products quicker than if it was using its own balance sheet.
“It is a very new model, but it is a model which is potentially growing very fast. The first fund is launched, 40% of equity is in the fund right now. And since we have the funds, we get a lot of new opportunity as well. The opportunities come because people know right now that there is growth money,” Joussen said,
“And therefore we are convinced it's the right way to go. We have the full control, but we don't have the investment on the balance sheet. We think it's absolutely spot on in order to achieve differentiation as well as have not all the investment on the balance sheet.”