June 2, 2020 / 1:54 PM / a month ago

Palminvest wants more after buying Portuguese hotel chain for $335 million

LISBON (Reuters) - Private equity firm Palminvest is keen to acquire more hotels in Portugal after buying luxury chain Hoteis Real and other assets for 300 million euros as it looks to the sector’s eventual recovery from COVID-19, its co-founder said.

Eurico Almeida, who is also the new CEO of Hoteis Real, said the acquisition made in February as the pandemic spread from China to Europe was a risk worth taking although it could take up to five years to restore its profits to where they were before the outbreak.

“We decided to take the risk of buying it because we studied other pandemics - such as SARS and the bird flu - and concluded that even if the hotels closed for three months, six months or a year, we could manage the situation,” he told Reuters.

He added that he considered Hoteis Real a 20-year investment.

“We are, at this very moment, trying to acquire more hotels. We want to grow and we’ll take advantage of the opportunities”, he said.

Founded in 2006, Palminvest already owned six Holiday Inn Express hotels in Portugal, two of which opened in 2019, when the sector was breaking revenue records.

Right after the purchase, the industry was hit by the suspension of flights and lockdowns in many countries, and Hoteis Real closed nine hotels, keeping only one open in Lisbon.

It will reopen two hotels in the southern Algarve region within 10 to 15 days, but is yet to decide on the timing of further openings depending on the resumption of international flights.

Official data showed on Friday the number of overnight stays by foreign tourists in Portugal dropped 98.3% in April to about 71,000 from the previous year.

“The sector is going to have revenue losses of more than 75% or 80% this year,” Almeida said, expecting hotel profitability to return to pre-pandemic levels in five years.

Editing by Andrei Khalip and Emelia Sithole-Matarise

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