Revo Hospitality Group, which went into self-administration in January, is attracting interest from investors as the managers running the company say they expect the properties involved to exit the process in the near future.
Around 175 hotels are now in debtor-in-possession-proceedings but these properties remain open and are still bookable for guests.
"We are receiving numerous inquiries from investors and are already holding initial talks. An internationally renowned consultant for the M&A process has been appointed. Both existing and new partners are interested in the hotels and want to get involved. We are therefore very confident that we will be able to put the hotels back on a solid and competitive footing so that they can leave self-administration in the near future," said Dr. Benedikt de Bruyn of GT Restructuring, who, together with his colleague Dr. Gordon Geiser, was appointed managing director of the relevant companies for the duration of the self-administration.
End of the white-label model
Revo’s struggles and the wider problems in the industry have prompted much discussion over the viability of the lease model – especially in countries like Germany where it remains popular.
Speaking with Hospitality Investor ahead of his appearance at IHIF EMEA next month, Patrik Hug, director of alternative investments for Europe at Invesco Real Estate, explained why it was becoming more unattractive.
“Thanks to the special fund for infrastructure and climate neutrality, the German economy is slated for growth, however the GDP forecast has just been revised downward – again, after three years without substantial growth, hence an easing on the bottom-line profits is not in near sight. Against this backdrop, it will be interesting to observe whether hotel groups with strong covenant profiles will resume signing direct lease agreements with sustainable rent levels, as Motel One has done. The white‑label model is becoming increasingly unattractive to institutional investors, especially as weak covenants erase the value of high rents and thus, I would also hope to engage in discussion with banks and their view on development financing as well as if their requirement have changed beyond the risk premium," Hug said.
What went wrong at Revo
Speaking to people in and around the industry it seems that Revo was the victim of its own success with its rapid growth over the course of a few years putting pressure on the organisation.
“A near fivefold expansion in five years is a classic indicator of possible over-leveraging in this industry,” said Marton Takacs, global hotel and leisure sector leader at accounting firm Moore Hungary
“Between 2020 and 2025, Revo’s revenues reportedly grew by roughly 650 per cent, yet the group did not translate that scale into sustained net profitability over the same period (in any of these years). In addition, Revo retained significant lease exposure across its roughly 250 properties, concentrating risk at the operator level as costs rose and post-Covid performance normalised.”
Ultimately the market will decide whether the lease model continues and there are still real estate owners like Pandox that remain committed to it. That said there are things that are worth focusing on when it comes to covering your investment.
“To limit downside risk, investors need to structure for the full market cycle, not just the upswing. In lease models, this means enforcing rent-coverage ratios that allow owners to intervene before liquidity stress becomes critical. In management agreements, we increasingly advise moving away from operator-friendly dual-failure tests toward single-trigger performance hurdles based on Gross Operating Profit,” said Takacs.
“If an operator cannot control costs, the owner needs a clear and workable exit. For higher-risk platforms, we typically push for corporate guarantees at parent level or letters of credit covering many months of returns.”