Why Pandox thinks hotels deserve more attention as an asset class

Hotels and hospitality deserve more attention as an asset class, according to Liia Nõu, CEO of Northern European hotel owner and operator Pandox. Commenting on the European hospitality market’s potential over the year ahead, Nõu says: ”Valuations stand on firm ground and hotel properties deserves more attention as an asset class.”

Founded in 1995 in Stockholm, Sweden, Pandox owns and leases hotel properties to major hotel operators. In total, Pandox owns around 160 hotels with approximately 35,800 rooms in 15 countries. The firm has been listed on Nasdaq Stockholm since June 2015. Its principal markets are Sweden, Germany, the UK and Ireland, Finland, Norway, Denmark and Belgium.

2023 deals

In 2023, Pandox  expanded its reach in the UK and added to its Stockholm holdings, executing three deals in total. Comments Nõu on the firm’s strategy: “We have a broad geographical footprint, and we can take advantage of opportunities in many markets.”

In the UK, Pandox purchased QHotel The Queens in the UK city of Leeds, West Yorkshire for $65.3 million. The deal, struck in February, comprises a 232-key property which was recently refurbished by previous owner Aprirose. It followed this deal with another UK purchase a few months later, acquiring the 202-room Hilton Belfast, in Northern Ireland, for $49.3 million from a controlled affiliate of Starwood Capital Group. Says Nõu: “The UK is one of the largest hotel markets in Europe. It has an attractive mix of domestic, regional and international demand and it has proved very resilient over time.”

Home comforts

Notably, 2023 saw Pandox return to its home base of Stockholm, Sweden, after a dearth of deals in recent years. The firm acquired Hotel Fridhemsplan for around $38.3 million, a property with 221 keys operated under a fixed lease with a private operator. Nõu says that the firm was “pleased” to have found a suitable deal in the city “after a long time”. She said: “This asset ticked all the boxes for value creation. 

“The hotel property has a strong location from both a leisure and business perspective with great development potential.

“We are now well into the repositioning of the hotel property with a concept renovation and a new lease with Scandic for their new economy/lifestyle brand.”

Sales details

Pandox continues to consider select sales too.  As well as its raft of deals in 2023, the firm exited an asset in Montreal, Quebec, selling its interest in the InterContinental Hotel for around $60.1 million. Was this a question of a non-core disposal? Says Nõu: “It is a question of making the best possible use of our capital. If there is a possibility to divest and reallocate capital to projects with a higher return we will do it.”

Looking ahead to 2024, Nõu says that the firm had already identified its priorities. “We have consistently been investing some MSEK 1,000 per year in our standing assets. Our main focus for 2024 is to deliver on the current pipeline, which covers a wide range of products and markets.”