After acquiring a majority stake in Raag Hotels, which owns the "budget boutique" brand Point A Hotels, Tristan Capital Partners has plans to grow that portfolio by two to three hotels a year, first in the United Kingdom and Ireland and potentially expanding across Europe later.

Kristian Smyth, executive director of investments at Tristan Capital, said Point A Hotels "operates in an attractive segment of the market, which has proven to be both resilient historically and with considerable potential for growth."

He said the operating performance of the brand's hotels during the COVID-19 pandemic and recovery reflect that strength and potential.

“In particular, the Point A brand has outperformed its competitors on the back of the ‘boutique’ experience it offers at an excellent price point in prime locations. We saw this as a unique opportunity to grow our hotels strategy by investing in a platform of hotels in the most sought-after segment of the market with a best-in-class operator with a strong track record of delivering,” he added.

Tristan Capital acquired Raag Hotels via its European Property Investors Special Opportunities 6 fund for £420 million pounds sterling ($551 million).

The transaction also marks a full exit for U.K. charitable foundation Wellcome Trust from both its stake in the Point A brand and the hotel sector. Wellcome owned 50% of Raag, as did hotel-management company Queensway and its owner Naguib Kheraj. Queensway and Kheraj remain a minority partner, and Queensway remains in charge of day-to-day management.

The Point A Hotels brand has seven properties in London and one each in Dublin, Edinburgh and Glasgow, with its combined room count of 1,520.

Smyth said the objective is to double the size of the portfolio in the medium term, and Tristan Capital already has several hotel projects in the works with Queensway.

Naushad Jivraj, CEO of Queensway, said the partners’ present focus is to grow the brand in the United Kingdom and Ireland.

“We see great potential for further Point A Hotels in London, Dublin and Edinburgh, as well as in other U.K. locations such as Cambridge, Oxford, Bath and York,” he said, adding the target in the medium term is to grow the portfolio to 3,000 rooms.

Smyth added he believes the model could be transferred to other European capital cities at a later stage.

Smyth said Queensway has a long history in hotels and has grown its portfolio from a single hotel in 2011 to 10 hotels. The Point A brand was created in 2016.

“We believe Queensway are best-in-class managers and developers,” he said.

The brands' guest mix includes both business and leisure travelers, booking for meetings and events as well as weekend excursions, Jivraj said.

“Consumer research showed us that customers were tired of typical budget-hotel experiences that lacked design, personality and hospitality. Point A came to life to fill a gap for guests looking for a central location and personal experience at great value, so we offer rooms with character, staff that smile and connections to local restaurants, bars and gyms,” he added.

He said since the lifting of COVID-19 restrictions in January, demand for Point A hotels has come back very strongly.

“In March 2022, revenues were well ahead of pre-pandemic levels for the same time of year with a re-focus on service, brand and guest. Business on the books is really positive, and we hope to continue to trade strongly through spring and into summer,” Jivraj added.

A message sent to Hotel News Now from Wellcome said it has been an investor in Raag since 2013, when the portfolio included four hotels.

“After a successful period of business building, we undertook the [Tristan] transaction as part of continual management of our asset-class exposure and growth in other areas of the property sector. We don’t directly own any other hotel businesses,” the emailed note said.

Five hotels Point A took over during Wellcome’s tenure formerly traded under the Tune Hotels name.

Queensway also owns coffee shops and fast-food restaurants, London residences and a London members’ club.