Perched on the south bank of the Douro River, the Hilton Porto Gaia - opened in 2021 - quickly caught the eye of buyers, notably Extendam, which semi-recently snapped up the 194-key property in collaboration with Highgate. The acquisition marks the French investment firm’s first partnership with the global hotel operator and adds another trophy to its expanding southern European portfolio.
But why did Extendam set its sights on this property? Maxime Durand, investment director - hospitality answers that question in an exclusive chat with Hospitality Investor.
A market on the rise
“It’s a landmark transaction in a growing market with long-term value and potential. You’re buying something that’s really rare, at a decent price and with potential to do even better in the future.”
It’s not hard to see it according to his point of view. The five-star asset boasts large guestrooms averaging 40sqm, 47 suites, extensive wellness facilities, a fine-dining restaurant, rooftop bar and more than 1,400sqm of meeting and event space including a 350-seat auditorium.
For Extendam, the Hilton Porto Gaia’s appeal lies not only in its market but also in its physical fundamentals and brand strength.
“The property has some strong fundamentals which we believe are really attractive,” Durand explains highlighting the large rooms, almost 200 keys and a “very nice wellness area”, adding “all these amenities make it well positioned to attract both corporate and leisure demand which is key in our investment strategy.”
The deal follows Extendam’s 2023 purchase of the Sofitel Lisbon Liberdade, and signals continued confidence in Portugal amid growing investor appetite for the southern Europe leisure market. For Durand, the rationale is clear.
Why Porto? Why now?
“We are interested in investing in Portugal in general, and mainly in the major cities. Porto is a growing market with airline traffic, tourist demand, leisure demand but also corporate demand. The city’s attractiveness for both segments keeps increasing, and that’s key for us.”
While Lisbon’s market is maturing and facing capacity constraints, Porto offers growing potential. The city welcomed nearly 7 million visitors in 2024, a 7 per cent increase year-on-year, and now records revpar levels surpassing Lisbon, buoyed by international arrivals and a growing events calendar.
“Lisbon is a bit saturated but Porto is a growing market and there’s investment from the municipality to attract business as well as travellers. Airport capacity through Lisbon means Porto has joined it to become one of the two main entry gates into Portugal for foreign traffic,” Durand notes.
That combination of infrastructure investment, municipal support and growing demand makes Porto - and specifically the Vila Nova de Gaia area which is undergoing major redevelopment - a strategic location.
Highgate partnership
While the hotel’s ESG credentials (an A-rated energy certificate and the Biosphere Responsible Tourism certification) are a plus amid tightening ESG scrutiny, the real upside lies in the operational turnaround.
Having opened just after the pandemic, the Hilton Porto Gaia was still finding its footing when Extendam entered the picture. “The hotel was managed from London in terms of revenue management,” says Durand. “We’ve changed that with Highgate and the results are already making a difference.”
The shift has brought a strong uptick in revenues and NOI, with Extendam projecting revpar growth from €100 in 2024 to €135–€150 by the end of the business plan, alongside occupancy gains from 65–70 per cent to around 80 per cent.
Today we have a cost structure suitable for a large increase in revenue, and there’s still a lot of potential on both ADR and occupancy. Growing turnover and profitability should naturally drive yield compression in valuation and exit in a few years’ time,” he says.
The collaboration with Highgate, which manages over ten hotels in Portugal, has been a natural fit.
“We were looking for the best opportunity to work with Highgate for a long time. They’re very strong in the US, have a solid Hilton franchise platform, and crucially they have local teams and operational expertise in Portugal,” Durand says.
Betting on regeneration
Vila Nova de Gaia, where the Hilton sits, is undergoing major urban redevelopment — from its riverfront renewal to new cultural and residential projects. For Durand, that regeneration narrative is an additional layer of confidence.
“It’s important for us to be in places where there’s growth potential and other investors coming in. When we see new offices, residential or even other hotels being developed, it’s positive - it creates demand and helps the area establish itself as a luxury hotel location.”
And the wider Porto metro area is benefiting from more than €2.3 billion in urban investment.
Looking ahead
The Hilton Porto Gaia deal also illustrates Extendam’s evolution from initially a primarily midscale and economy investor in France to a pan-European player also targeting premium and luxury urban assets.
“We started ten years ago with economy and midscale hotels, mainly in France, but we’ve been expanding in Europe and up the value chain. The idea is to keep being strong in what we know, while growing in the premium and luxury segments because there are really interesting opportunities there.”
Looking to 2026–2027, the company plans to deepen its presence in Lisbon, Porto and potentially Algarve or Comporta, balancing value-add repositioning with stable cash-flow assets.
For Extendam, Hilton Porto Gaia is part of that journey. “It’s a combination of safety and growth potential,” says Durand. “You’re buying something rare, in a market that’s still rising and that’s exactly where we want to be.”