Fewer rooms, more value: repositioning La Pérouse in Nice

Extracting value and creating value are not the same job. Only one of them leaves the hotel worth more. Line by line work on operating charges still has to happen. It just never gets a team out of bed in the morning. The assets worth chasing have several levers to pull, not one: - a different mix of clientele - a CapEx program - a sharper revenue management strategy Top line work pulls the hotel team along with it. People can feel a hotel getting better. Cost cutting on its own has never made anyone proud of their day.

Hotels get bought and sold on euros per room. So taking rooms out looks like setting money on fire. A 56 room hotel in Nice went down to 53. Some of those rooms looked straight into the back wall of the building next door. Underinvested for years. A team tired of promises that were never funded. Three rooms came out so the other 53 would finally make sense. The call was made with the exit already in view. A consistent hotel is easier to sell than a bigger one that does not hold together.

A hotel can be iconic and still be underperforming. Reputation is not the same as profit. At acquisition, EBITDA sat at roughly 1.5 to 1.7 million. At sale earlier this year, EBITDA was close to 4 million. The asset was already well known on the market. It just needed a boost. The part investors tend to miss: - above 1 million euros per key, the yield usually disappears - this one still handed the buyer close to 6 percent Rarely in a career does EBITDA move that far on a stabilised trophy asset.

A four star hotel out-earned five star hotels in the same destination. The star rating was never the ceiling. EBITDA gets the headline. RevPAR is the proof. Two more numbers rarely make the deal sheet. Review scores on booking.com and Google, kept high. Staff retention, high enough that returning guests met the same faces. People came back for the attention of the staff. Keep the team, and the welcome stays consistent. That consistency is the product.

The best asset in a portfolio is sometimes the one nobody is watching. Big boxes get the attention. Small jewels get forgotten. That was the situation in Nice. An institutional owner was focused on the big boxes in its portfolio. The small jewel sat there, left alone. Seven letters of intent later, the owner granted an exclusivity. Timing helped. This was COVID, and assets were at a crossroad of decisions. Many parties tried to buy it. Price alone did not win it: - cost of capital - shareholders aligned on one equity story - strategic investors still hungry for the asset class while COVID scared the market The property was acquired on great acquisition metrics. Attention follows size. Value does not.

The restaurant was trying to be luxury. It ended up being convivial, and that is when it started earning. Not cheaper. Friendlier. More lifestyle, more authentic. The target was two crowds at once: locals and hotel guests. What it took: - a new chef and a new team - an outlet added on the rooftop, not one closed - a privatized barbecue night once a week That rooftop became the most instagrammable thing on offer. By the time the hotel was sold, the food and beverage was properly profitable.

Selling one year early would have looked like a win. Waiting one more year looked like a risk. The private equity instinct is to extract value as early as possible. Book the return, move on. This exit went the other way. The choice was to sell on a 3 million EBITDA, or hold, consolidate the performance, and settle at 4. That meant asking the owners, a financial family office alongside a private equity fund, to stay in for another twelve months. Proceeds from a sale one year earlier would already have been amazing. Waiting did better. The earliest exit is not automatically the best one.

Extracting value and creating value are not the same job. Only one of them leaves the hotel worth more. Line by line work on operating charges still has to happen. It just never gets a team out of bed in the morning. The assets worth chasing have several levers to pull, not one: - a different mix of clientele - a CapEx program - a sharper revenue management strategy Top line work pulls the hotel team along with it. People can feel a hotel getting better. Cost cutting on its own has never made anyone proud of their day.

Hotels get bought and sold on euros per room. So taking rooms out looks like setting money on fire. A 56 room hotel in Nice went down to 53. Some of those rooms looked straight into the back wall of the building next door. Underinvested for years. A team tired of promises that were never funded. Three rooms came out so the other 53 would finally make sense. The call was made with the exit already in view. A consistent hotel is easier to sell than a bigger one that does not hold together.

A hotel can be iconic and still be underperforming. Reputation is not the same as profit. At acquisition, EBITDA sat at roughly 1.5 to 1.7 million. At sale earlier this year, EBITDA was close to 4 million. The asset was already well known on the market. It just needed a boost. The part investors tend to miss: - above 1 million euros per key, the yield usually disappears - this one still handed the buyer close to 6 percent Rarely in a career does EBITDA move that far on a stabilised trophy asset.

A four star hotel out-earned five star hotels in the same destination. The star rating was never the ceiling. EBITDA gets the headline. RevPAR is the proof. Two more numbers rarely make the deal sheet. Review scores on booking.com and Google, kept high. Staff retention, high enough that returning guests met the same faces. People came back for the attention of the staff. Keep the team, and the welcome stays consistent. That consistency is the product.

The best asset in a portfolio is sometimes the one nobody is watching. Big boxes get the attention. Small jewels get forgotten. That was the situation in Nice. An institutional owner was focused on the big boxes in its portfolio. The small jewel sat there, left alone. Seven letters of intent later, the owner granted an exclusivity. Timing helped. This was COVID, and assets were at a crossroad of decisions. Many parties tried to buy it. Price alone did not win it: - cost of capital - shareholders aligned on one equity story - strategic investors still hungry for the asset class while COVID scared the market The property was acquired on great acquisition metrics. Attention follows size. Value does not.

The restaurant was trying to be luxury. It ended up being convivial, and that is when it started earning. Not cheaper. Friendlier. More lifestyle, more authentic. The target was two crowds at once: locals and hotel guests. What it took: - a new chef and a new team - an outlet added on the rooftop, not one closed - a privatized barbecue night once a week That rooftop became the most instagrammable thing on offer. By the time the hotel was sold, the food and beverage was properly profitable.

Selling one year early would have looked like a win. Waiting one more year looked like a risk. The private equity instinct is to extract value as early as possible. Book the return, move on. This exit went the other way. The choice was to sell on a 3 million EBITDA, or hold, consolidate the performance, and settle at 4. That meant asking the owners, a financial family office alongside a private equity fund, to stay in for another twelve months. Proceeds from a sale one year earlier would already have been amazing. Waiting did better. The earliest exit is not automatically the best one.

Extracting value and creating value are not the same job. Only one of them leaves the hotel worth more. Line by line work on operating charges still has to happen. It just never gets a team out of bed in the morning. The assets worth chasing have several levers to pull, not one: - a different mix of clientele - a CapEx program - a sharper revenue management strategy Top line work pulls the hotel team along with it. People can feel a hotel getting better. Cost cutting on its own has never made anyone proud of their day.

The best asset in a portfolio is sometimes the one nobody is watching. Big boxes get the attention. Small jewels get forgotten. That was the situation in Nice. An institutional owner was focused on the big boxes in its portfolio. The small jewel sat there, left alone. Seven letters of intent later, the owner granted an exclusivity. Timing helped. This was COVID, and assets were at a crossroad of decisions. Many parties tried to buy it. Price alone did not win it: - cost of capital - shareholders aligned on one equity story - strategic investors still hungry for the asset class while COVID scared the market The property was acquired on great acquisition metrics. Attention follows size. Value does not.

Hotels get bought and sold on euros per room. So taking rooms out looks like setting money on fire. A 56 room hotel in Nice went down to 53. Some of those rooms looked straight into the back wall of the building next door. Underinvested for years. A team tired of promises that were never funded. Three rooms came out so the other 53 would finally make sense. The call was made with the exit already in view. A consistent hotel is easier to sell than a bigger one that does not hold together.

The restaurant was trying to be luxury. It ended up being convivial, and that is when it started earning. Not cheaper. Friendlier. More lifestyle, more authentic. The target was two crowds at once: locals and hotel guests. What it took: - a new chef and a new team - an outlet added on the rooftop, not one closed - a privatized barbecue night once a week That rooftop became the most instagrammable thing on offer. By the time the hotel was sold, the food and beverage was properly profitable.

A hotel can be iconic and still be underperforming. Reputation is not the same as profit. At acquisition, EBITDA sat at roughly 1.5 to 1.7 million. At sale earlier this year, EBITDA was close to 4 million. The asset was already well known on the market. It just needed a boost. The part investors tend to miss: - above 1 million euros per key, the yield usually disappears - this one still handed the buyer close to 6 percent Rarely in a career does EBITDA move that far on a stabilised trophy asset.

Selling one year early would have looked like a win. Waiting one more year looked like a risk. The private equity instinct is to extract value as early as possible. Book the return, move on. This exit went the other way. The choice was to sell on a 3 million EBITDA, or hold, consolidate the performance, and settle at 4. That meant asking the owners, a financial family office alongside a private equity fund, to stay in for another twelve months. Proceeds from a sale one year earlier would already have been amazing. Waiting did better. The earliest exit is not automatically the best one.

A four star hotel out-earned five star hotels in the same destination. The star rating was never the ceiling. EBITDA gets the headline. RevPAR is the proof. Two more numbers rarely make the deal sheet. Review scores on booking.com and Google, kept high. Staff retention, high enough that returning guests met the same faces. People came back for the attention of the staff. Keep the team, and the welcome stays consistent. That consistency is the product.