Investor Profile: Inside Invel’s ‘two-pronged’ hospitality strategy

Discerning holiday makers heading for Greece may already have bookmarked the White Coast Pool Suites on the volcanic island of Milos, a five-star hotel where every suite has its own private swimming pool. The property also recently caught the eye of private real estate investment and asset manager Invel, which bought the hotel in January for its “two-pronged” hospitality strategy, as Alexis Pipilis, Invel’s head of acquisitions in the Hellenic region, explains.

“We are currently focusing both on luxury hotels, and on large, resort-style hotels with branded residences,” Pipilis says. “The luxury segment fares better during market downturns as it is typically less affected by global macroeconomic situations in the short term. White Coast Pool Suites was an asset that ticked that box.”

The hotel has been acquired by Invel (51%) alongside Prodea Investments (49%), through its discretionary fund Invel Eudora Fund 1LP (Eudora 1), which plans to inject “meaningful capital” into its expansion. Situated near Sarakiniko beach, it currently has a total of 30 suites, each with a pool and uninterrupted sea view, which will be expanded to 50 suites by the end of May. Pipilis says that they would like to add another 70 suites in the future, to take it to 130 keys. “It’s one of the best rated hotels in Greece – architecturally, it’s a gem. It already generates a decent income given its size, so we can use that capital to boost our returns and work through further development.”

Currently branded as Small Luxury Hotels of the World, the property will be operated by Domes Resorts, a luxury hotel operator. Although the hotel is currently run independently, Pipilis doesn’t rule out bringing in a flag in future. He is also optimistic about the group’s “first mover advantage” on the relatively unknown island of Milos. “Mykonos and Santorini are saturated, with a moratorium on the development of new hotels, and the imminent arrival of several international flags. Milos, tipped by Conde Nast for big things, doesn’t have much five-star competition and significant potential for both F&B and hotels.”

Sustainable thinking

Eudora 1’s deal for the asset closely follows the purchase of Hotel Bellevue Suites & Spa in Cortina d’Ampezzo in 2022, another property Pipilis is excited about. “Cortina is co-hosting the 2026 Winter Olympics with Milan, so a special planning regime is being introduced to allow the redevelopment of older stock to cater for the Games,” he says. Although Bellevue’s central chalet dates to 1894, and the hotel names the likes of Ernest Hemingway amongst its historic patrons, more recent, rather tired refurbishments have inspired Invel to pursue a major overhaul. Notes Pipilis: “We are most likely going to demolish much of the existing structure and create a highly sustainable new-build constructed out of wood. Sourcing local materials, the hotel’s rooms will be built into the side of the mountain to create a truly unique project,” Pipilis says.

While Invel’s interest in luxury projects has risen over the last year, its other take on hospitality involves betting on large, resort-style schemes through its operating platform, MHV. These include the Parklane Luxury Collection Resort & Spa in Limassol, which the firm acquired in 2021. For Pipilis, the winning combination here is investing in a major income-generating hotel which is flanked by branded residential accommodation. “We tend to reduce our equity in the deal by selling the residences, helping hedge against the risks of the hotel operations,” he says. “Macroeconomic headwinds – including inflation and interest rates – on the heels of Covid and war in Europe have all unsettled the hospitality business. Through MHV, we have assets in Greece and Cyprus, the latter of which has been significantly impacted by the reduction in Russian and Ukrainian tourism.”

Opportunistic approach

Invel, founded in 2013, isn’t just a hospitality investor, in any case. “We are a pan-European, opportunistic investor,” says Arnaud Plat, senior partner in Invel. “We do look at all asset classes and are fairly agnostic. We like hospitality for a number of reasons, however, and mainly focus on just a few markets – Italy, Greece and Cyprus.

“As well as having very high barriers to entry, these are markets which can provide compelling fundamentals. The vast majority of hotel stock is family owned and unbranded, so there is an opportunity to bring in international flags. By and large, stock in all three markets is fairly low quality, so there is a clear chance to reposition them and turn them into institutional product. These are also safe markets with fully developed infrastructure, all of which is important these days.”

Plat adds: “Over the last few years, there has been a shift from North Africa to core European markets due to safety concerns. Fundamentally, we take the view that people will always want to go on holiday, but will often seek destinations that are somewhat closer to home; these three markets in particular are a no-brainer from a hospitality and leisure perspective.”

Notes Pipilis: “Italy and Greece are probably still the European markets with the lowest number of flagged hotels. We believe that there is an opportunity to change that narrative and introduce many more third-party brands, typically through franchise agreements. Then, if you can drive the rate, you can drive the exit. Americans are the highest spending tourists in Greece and often follow reward programmes to spend points or miles, so they will seek out international brands such as Marriott. Similarly, through Prodea, our Greek REIT, we also have a few city hotels including two Moxy-branded properties providing a core, core plus return. These don’t bring the opportunistic return that we are aiming for as Invel, but it’s all part of the institutionalisation of the sector.”

Concludes Plat: “At the end of the day, hospitality investment still offers an important hedge against high inflation. Asset classes with short leases can outperform all other asset types in this kind of climate, and what better than a hotel, where ADR can quite literally be adjusted on a daily basis. Furthermore, at the luxury end of the spectrum, there’s a lot less sensitivity to rate rises.”