As trading conditions remain tough, some hotel owners and real estate groups are looking at taking direct control of their hotel operations to secure long-term success.
Covivio is a French real estate group with €24 billion in assets. Half of its investments are in the office sector, 30 percent in residential, and its hotel interests have increased from 15 percent in 2020 to 20 percent today. Covivio owns 238 hotels worth €6.4 billion.
Over the years, Covivio has been extending its expertise in real estate investment into operations. In the office sector, it launched a flexible workplace management solution called Wellio deployed at several sites in France and Italy and managed by Covivio employees.
It is now doing the same with its hotels, via its own operations platform, known as WiZiU.
“To reach the end of the value chain, we felt it was important to do the same in the hotel sector as we’d done in the office sector, by being able to directly manage part of our portfolio,” said Sébastien de Courtivron, Deputy CEO Hotels, Covivio.
Today, the WiZiU platform manages 24 hotels in France and Belgium. Courtivron explained that the platform was created: “to build this eco-system of employees, to align all interests, to drive success because we are in full control of the value chain.”
Historical background
Historically, it was the norm for major hotel companies like Hilton and Marriott to both own their real estate and run operations too. This vertically integrated model meant one entity bore all the capex, operational risk and reward, simplifying governance and ensuring tight control over standards.
By the 1990s, industry leaders began to question this all-in-one model, and a wave of restructurings split real-estate ownership (PropCo) from operations (OpCo). Pioneered by Marriott’s 1993 spin-off of Host Marriott, the asset-light ethos spread, with Hilton, IHG, Accor, and many regional chains following suit.
Selling off their real estate freed up capital for brand expansion and debt reduction. And, while they concentrated on guest loyalty, distribution, and design, these hotel groups even started to move away from day-to-day hotel management, instead, relying on a new category of third-party hotel operators.
Today’s complex picture
Today, two decades on, hotel ownership and operations are more of a patchwork than ever. Undoubtedly, the ‘bricks and brains’ separation unlocked value and fueled growth. It also set in motion the fragmentation we see today: multiple contracts, competing incentives, split profit pools, complex decision chains.
As tough trading conditions put pressure on all stakeholders, tensions between owners and operators are coming to the surface.
Is Covivio’s in-house operating platform a return to the mono-brand empires of the last century? No, but it is an interesting step in that direction.
For sure, it is a cyclical response to today’s fragmentation and part of a wider trend of ownership groups taking greater control of their operations.
Operational leakage
Jonathan Lee Jones, senior VP investments Europe, LHC Group, recently said: “We consider ourselves platform builders, rather than pure real estate investors. It's a much more efficient and effective way of deploying capital, and we also avoid the leakage of management fees to a third-party.”
For Paul Atema, director of real estate, APG Asset Management, a preferred model is to develop, own and operate hotels: “So we don't have to go through the headache of agreeing a deal with an operator.”
Ronen Nissenbaum, CEO Benelux, Spain & UK, Fattal Hotel Group, recently said he had chosen to buy three variable lease hotels from their owner rather than continue losing money with them.
Covivo’s operating platform is being use at ten hotels in France and Belgium plus 14 recently integrated properties from a deal with AccorInvest. As well as day-to-day operations, the platform is carrying out renovations, repositionings, and rebrandings. Given the volume of work required, Courtivron said it will be four years before any further steps are taken, such as extending the use of the platform to other hotels in the Covivio portfolio.
“The good news is that everything is proceeding at pace,” he said, “and we are fully aligned in terms of getting the results we expect in terms of EBITDA and value creation. Our goal [with WiZiU] is to make sure that the money we spend is going back to the hotels.”
All quotes taken from the IHIF EMEA 2025 panel: ‘POV: Do hotel owners need their own operating platform for long-term success?’ Couritvron was interviewed by Maria Calvo, director asset management and advisory, Savills.