During a time where the budget hotel sector was growing three times faster than the overall hotel market, we identified the opportunity to exploit undersupply in the London budget hotel market. We gained exclusive rights to develop low-cost hotels under the Tune Hotel brand in London for seven years as part of a joint venture.
The Tune Hotel concept was based on providing a high-quality bed and shower at a very affordable price. Like low-cost airlines, the marketing model was internet-driven with pricing based upon demand and early booking opportunities, offering access to very low rates.
We converted secondary London office assets into a prime hotel platform through acquisition from distressed sellers. The business produced an attractive cashflow profile with the potential for long-term capital appreciation.
Having supported the early stages of this business development, we sold our share to a long-term investor in 2013 to be part of the next phase of growth.