TUI puts hotel project fund into action

Pictured: Emerald Zanzibar Resort & Spa.
TUI Group has entered the investment phase of a hotel fund it jointly launched with Luxembourg-based Hansainvest, starting with a five star all-inclusive resort in Zanzibar, Tanzania.

The hotel fund’s first acquisition is the newly-opened Emerald Zanzibar Resort & Spa, which, after a transition period, will be operated by TUI Hotels & Resorts from the beginning of 2024.

Expansion momentum

TUI is increasingly focusing on profitable growth again as normal operating business returns following the pandemic disruption. With its hotels and resorts division generating consistently positive results the firm will use its momentum to further expand its hotel portfolio. To do this, the company will utilise the asset-right strategy initiated at the end of 2019 via management and franchise contracts as well as successful joint ventures and investment partnerships.

In the current financial year, TUI expanded its hotel portfolio by 32 properties, some operated under the TUI Blue brand. In order to further accelerate the less capital-intensive expansion, the global hotel fund was also initiated last year and, following an initial successful phase of capital raising, is now moving into the first investment phase.

New facility investment

The fund also intends to acquire a hotel from TUI’s portfolio. This is currently operated by a TUI hotel brand and this will continue via a management contract. TUI will invest the proceeds of the sale in further hotel growth.

Designed for growth, the fund plans to invest primarily in new hotel facilities that are acquired or newly developed and are not currently part of the TUI Group. The properties will essentially be operated under the TUI Group’s international hotel brands (such as Robinson or TUI Blue) and managed operationally by TUI. The return from the investment in hotel assets accrues to the fund investors. TUI receives ongoing remuneration for operating the hotel facilities and for providing investment advice to the fund.

Profitable growth

Peter Krueger, member of the TUI AG executive board responsible for group strategy and mergers and acquisitions: “Profitable growth is the focus of our strategy for the future. Our own hotel and club brands make a significant contribution to growth and the company earnings and offer our guests exclusive products.

“We initiated the hotel fund with the aim of further expanding our successful hotel portfolio and increasing the earnings of the segment, while at the same time being able to offer professional investors an attractive hotel property investment. The fund has the means to purchase further hotels. The next concrete investment opportunities are already being pursued.”