Pygmalion Capital focuses on solutions to Europe’s growing hotel distress

BERLIN — Pygmalion Capital Advisers is using its funds to help hotel owners facing non-performing loans realize the potential of their assets.

During an interview with the International Hotel Investment Forum, Christophe Beauvilain, founder and managing partner of Pygmalion, said his company is considering hotels priced between 30 million euros ($32 million) and 50 millions of euros.

The firm, which has offices in Barcelona and London, also conducts portfolio transactions and is analyzing a few currently.

Beauvilain said the company has been largely focused on special-situation assets since the Great Recession, but not all distress in Europe is obvious.

“It depends on your definition of [distress] is? If you follow what the major brokers are selling… for the last couple of years valuations have remained extremely high but I would say when you own a struggling hotel it is very unlikely that you will name any of them major brokers. … These types of transactions tend to be under the radar screen, he said.

“European banking authorities predict that it will actually continue to grow because you’ve had two years of financial stress in the system, and it’s just not going away,” he added.

The lease-driven, low-cost institutional capital model has been rocked over the past two years, Beauvilain said. The lack of hotel offers from international brands in some European cities allows companies such as Pygmalion room to move and opportunities to grow between this offer and customer demand.

“If I look at competitive cities like Barcelona or Venice, where there are often moratoriums on building new hotels, it creates an interesting imbalance,” he said.

Pygmalion’s portfolio includes nine hotels in Spain with a total of approximately 1,650 keys.

He added that Spain and Italy were the most interesting markets, but since the pandemic all of Europe has become attractive.

For more information and commentary from Beauvilain, watch the video above.

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