A fresh chapter begins
After weighing up several options, and on the advice of friends, Jaume opted to partner with co-founder Liza Masías to establish an investment fund that would target boutique hotels. With that, in December 2013, Aina Hospitality was born.
“As things turned out, we raised more money than we anticipated, so instead of just focusing on boutique hotels, we had the opportunity to look at larger properties as well. Within around three to three-and-a-half years we’d acquired a portfolio of nine hotels. That gave us a platform to look at developing additional hospitality investment funds, and to do this we eventually created a second company – BOSCALT – to focus on the investment side.”
While this was happening, the original Aina Hospitality business transformed into a pure play hotel management company, which looks after properties owned by BOSCALT as well as for third party clients.
Significant support
It’s been a highly successful journey to date; one which has attracted some serious financial backers, including strategic partner Edmond de Rothschild Private Equity.
How does Jaume characterize the investment philosophy that sits behind this success? And how has it evolved since the early days of Aina in 2013?
“It’s not written down anywhere, but I suppose that over the years we’ve realized our skills are more on the luxury and ultra-luxury side, so that’s where we focus our activities. But more than this, we look for buildings that have a lot of potential. These might have been iconic hotels in the past, even if they have become rundown in the present. Some may not even be a hotel today. Where we add value is to take them on and use our hospitality experience to transform them into modern, contemporary spaces.”
As a perfect example of this philosophy, Jaume cites the recently opened Hyde London City hotel (pictured), which has adopted the site of what is believed to be the fourth oldest hotel in the UK capital, and the first to install electric lighting!
“This building was once the Spiers & Pond Hotel, but it closed way back in 1900 and became offices,” Jaume explains. “We’ve turned it back into a hotel, and we’ve also opened a very good and very successful Turkish restaurant, Leydi, on the premises, plus a stylish speakeasy bar in the basement, called Black Lacquer.”
In terms of projects currently on the go, Jaume’s eyes light up when he speaks of plans for the historic Majestic Hotel in Rome – famous in part as the location where scenes from the movie La Dolce Vita were filmed.
“When it reopens, it will be as the Baccarat Hotel Roma, an ultra-luxury lifestyle hotel with 83 rooms and suites. It’s going to be among the top three or four hotels in the city, with a spa and several F&B outlets.”
These projects exemplify Jaume’s mission to bring new life to old properties. “Our aim as investors is to make money for our stakeholders, of course; but for me it’s also about giving something back to society. Restoring an old building and giving it another life – that gives me pleasure above and beyond the business aspect.”
The desire to be good corporate citizens also translates to the area of sustainability, which Jaume and his team take very seriously. For example, the company employs a dedicated sustainability coordinator, who oversees activities relating to sustainability at every property within its portfolio.
“The idea is that all our hotels comply with the highest possible standards for sustainability,” he explains. “Each property has a sustainability champion in charge of both developing strategies and ensuring they are reported on and accounted for. Of course, when you have a historic building like the Majestic Hotel in Rome, you cannot reach a Gold standard for sustainability – that level requires a brand new, purpose-designed building. But we are aiming for the Silver standard, which is the maximum available to us.”
Invest the world
While Hyde London City and Baccarat Hotel Roma both exemplify his firm’s preference for European ‘gateway cities’, Jaume adds that his hospitality horizons are as broad as the industry itself.
“I think Europe still has strong fundamentals, but as an investor I cannot help but be impressed by what is happening in Saudi Arabia right now,” he says. “They’re essentially building another Dubai, but at an even faster pace than Dubai did! That region is attracting some of the smartest people in hospitality, and we’re going to hear a lot more about not just Saudi Arabia and Dubai, but also Abu Dhabi and Egypt too.”
In addition, Jaume has recently traveled to Mexico and Morocco, discovering experiential hotels that he likes in both markets. And he thinks we’ll see more properties carrying brands that have crossed over from luxury fashion and accessories, such as Bulgari Hotels.
Finding the funds
While this may sound glamorous and exciting, running a successful hospitality investment fund is not without its challenges.
First and foremost among these is obtaining investment financing. Jaume notes that many banks have reduced their hospitality real estate lending exposure following the shock of the Covid pandemic and associated lockdowns. At the same time, global interest rates have risen sharply since the Covid period, causing a ‘double whammy’ of tighter money at higher cost for investors.
“On top of that we had rising inflation throughout this period. So yes, we’ve had to be quite careful in that environment,” notes Jaume.
Still perhaps the hardest challenge, however, is finding the right properties and then navigating the long and complex transaction process. Jaume adds that BOSCALT’s preference for iconic properties with high upside potential pitches the firm into an exceptionally competitive segment of the market, making life especially challenging.
“Buying hotels is never easy. You have to be very patient and be prepared to look at many properties and entertain a lot of conversations before you can close a deal. I’d say for us the average transaction time is around two years. I mean, you could do it more quickly, but then you’ll probably not make a profit on that investment.
“As with all investing, if you want to achieve a higher rate of return, you have to accept a certain level of risk – and the higher the risk the more restrictive it is in terms of finding investors, whether that’s small family offices or major investment firms.”
The good news is that investors remain drawn to hotels thanks to the level of personal attachment that cannot be replicated in other real estate or non-real estate sectors.
“For an investor, the great thing about hospitality real estate is that you can see, feel and stay in your investment. If you put your money into, say a solar farm in the middle of the desert, you’re probably never going to go there. But a hotel in the center of Paris, or Brussels? It’s right there waiting for you.”
Put your ambition on firm foundations
Recognizing that a career in hotel investment has become an attractive option for many young talents, including Glion students, Jaume is quick to offer some sage advice as the interview concludes.
“I think it is super important to develop your operational experience before you try to forge a career in hotel investment. An important part of any investment strategy is generating value by improving operational and financial performance. And to do that you need to understand how a hotel works as a business and how things fit together operationally.
“If you are a young person today you have a long career ahead of you. We’ve all been young and it’s natural to want to go fast; but in this business it’s more important to go step-by-step and make sure you build the necessary experience.
“It’s difficult to find good asset management professionals who understand the workings of the hotel business and can use that knowledge to challenge how things are being done.”
