Investor Union Hanover has received a substantial equity investment, and hired a new senior team, to grow its Urban Villa hotels and Hoax hostel concepts across the UK, Europe and further afield. The investment will allow Union Hanover to gear up from its current GBP350m size, to become a GBP1bn player in the hospitality market, its backers promise.
Currently, Urban Villa has hotel three developments progressing around London, and additional sites in Edinburgh, Aberdeen and Portsmouth. Hoax has been established with a site in central Liverpool, and will now be rolled out to other key gateway cities across Europe.
The additional financial resource has come from EquityBridge Asset Management, a Guernsey-based property, private equity and asset manager. EBAM’s managing director Warren Malschinger commented: “Our investors have been very impressed with Union Hanover’s access to deal flow, creative and cutting edge innovation and design development. These valuable skills have now been further enhanced with the very experienced delivery team that has been assembled.”
Eric Jafari, who as chief executive of BridgePoint Ventures helped develop Urban Village and Hoax, becomes European managing director of Union Hanover. Peter Debs has been appointed managing director, with a focus on development in the Americas. Andrew Fowler, formerly at StayCity, becomes hospitality director, while financier Merzak Kaddour will join as hotels operations director. Charles Cresser joins from JLL as European development director, with Richard Kiibler becoming development director for the Americas. Laura Prosser, formerly at Ashurst, becomes general counsel. Also joining is financial controller Muhammad Mushtaq and architectural and design counsel Matthew Grzywinski.
“EBAM’s capital injection has provided us with the resources to develop an institutional grade platform with the experience and depth to cover all three facets of hospitality: property development, operations and creative brand development,” said Jafari. “This provides us with a very clear and demonstrable competitive advantage in our space.”
It will not be until late 2015 that the first Urban Villa product is delivered into the serviced apartment market, one that agent Savills recently reported as offering considerable scope for growth, and in need of some strong trailblazing brands to help catch the imagination of consumers.
Serviced apartment supply in Europe is low, compared with other international destinations. New York has 5.8 units per 1,000 overseas visitors, while in Hong Kong the figure is 2.9. In contrast, London, Paris and Amsterdam have 0.6, 0.3 and 0.2, calculates Savills. Such a nascent sector has yet to attract institutional investment, said James Bradley of Savills, something that should benefit companies such as Union Hanover: “Over the short term, private equity and owner operators will continue to be the primary driver of expansion.”
Urban Villa is designed around a serviced apartment unit, each with kitchen and living space in addition to a bedroom and bathroom. The first London project, a 217 unit conversion from an office block, and a 182 unit block in Aberdeen, are due to open in late 2015. Projects in Edinburgh and Portsmouth are scheduled to come on line in 2016. Urban Villa aims to appeal both to extended stay business travellers, and to couples and families in the leisure market.
Hoax, which is a joint venture with Starboard Hotels, opened its first 268 bed unit in Liverpool in summer 2013, and is now on the lookout for further suitable sites. Jafari has previously suggested the brand could extend to London, Bristol and Brighton as well as key gateway European cities, where a preponderance of value-led travellers comes through. The concept aims to be more luxurious than some more basic European hostel formats, while still offering a central location at a reasonable price.
HA Perspective [by Katherine Doggrell] Last month saw the first TV advert in the UK for serviced apartments, courtesy of Staycity, with the company’s managing director, Jason Delany, saying that the “advert aims to educate guests about the key advantages of a serviced apartment over a hotel room”.
Travellers are, as Housetrip and Airbnb will tell you, increasingly wise to the advantages over a hotel room of the growing range of accommodation available to the traveller. With Urban Villa, the traveller gets the reassurances of a brand which the likes of Airbnb cannot as yet deliver (this could change as the Airbnb brand itself grows).
As with Airbnb, the serviced apartment sector is looking to shorter stays for its business, away from the traditional extended-stay model, encouraged by travellers who are booking their own stays, rather than relying on travel management companies.
The leisure traveller in the hostel sector is looking for experience, but not necessarily the experience of bedbugs and mystery meats. The likes of Generator have championed this sector, while also realising the revenue benefits of having f&b onsite.
The drive for greater control of where they stay, from both the business and leisure traveller, means that accommodation should become ever-more varied to attempt to meet their diverse needs. One need which is expected to remain constant is the need for value, which Union Hanover hopes to capitalise on with these brands.