At a time when companies in the hospitality sector are facing unprecedented challenges, private equity firm Alta Capital Real Estate has grasped the opportunity to invest in undervalued wellness hospitality assets across Asia-Pacific.
It recently launched the Alta Hospitality Fund Asia with the aim of “repositioning, rebranding and redeveloping assets for the post-COVID world in order to deliver solid returns”. It aims to create a portfolio value of US$50m (€42m, £36m) and deliver a return of 15-25 per cent over six years.
The fund is being helmed by former HSBC head of equities for Asia-Pacific, Rakesh Patel, who decided to launch it because it’s timely to do so, but also because he has a personal passion for wellness stemming from an ‘incurable’ illness as a teenager which he overcame by following the Gerson Therapy regime.
“Hospitality asset prices are dislocated due to the pandemic, which provides an interesting point in the cycle to invest,” he explains, “plus, we’re predicting accelerated growth in wellness in the future, because people have become increasingly conscious of their physical and mental wellbeing.”
Alta quotes GWI figures, reporting that the wellness tourism market is projected to achieve a compound annual growth rate of nearly 7 per cent between 2020 and 2025, reaching US$1.1bn (€923.8m, £792.6m) in revenues by 2025.
Consequently, Patel argues it makes good sense to reposition assets for this structural trend, saying: “acquiring assets at this point helps us manage our downside risk while giving us an attractive upside reward.”
The company won’t invest in standalone spas, but will focus on hospitality assets that either already have an existing wellness component or could be repositioned that way. It has a particular interest in acquiring boutique hotels, wellness retreats and villa communities with 50-150 keys and already has its sights set on a property in Bali, as well as a development in Galle, Sri Lanka with a “premier wellness retreat”.
Patel – himself a trained LEED professional – believes consumers are not only looking for more meaningful travel that incorporates traditional and modern wellness practices and authentic local experiences, but that they’re also increasingly mindful of brands’ approach to the environment, their employees and their attitude towards the communities in which they operate.
To this end, both wellness and sustainability will be at the heart of Alta’s investment strategy. Each project will operate sustainably, incorporating smart-building design elements, such as water recycling, energy efficiency and proper site orientation to boost operating efficiency and minimise CO2 emissions.