kopi-C with ProsperCap’s CEO: ‘Investing in hospitality real estate requires diverse skills’

kopi-C is a regular column by SGX Research in collaboration with Beansprout that features C-level executives of leading companies listed on SGX. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.

When investing in the hospitality sector, the key is choosing assets that offer something extra, says Iqbal Jumabhoy, chief executive officer and executive director of real estate investment and property management firm ProsperCap. The Singapore-listed firm owns 17 hotels in the United Kingdom, including in Birmingham, Bristol, Leeds, Manchester and Glasgow. 

“Everyone focuses on London, but if you look around in the United Kingdom, there are many opportunities to be had. Domestic leisure and business travel are both growing, so if you select hotels in the right areas, you can get excellent deals. You just need to make sure that you are buying assets that have some catchment, some attraction for travellers.”

For example, ProsperCap has a hotel in Stratford-upon-Avon, the English city famous for being the birthplace of William Shakespeare. “That’s got huge international appeal.” The company’s hotel in Harrogate is next to the only conference centre in the area, while its hotel in Glasgow is across the street from the OVO Hydro arena, Scotland’s largest entertainment venue.

“Your assets should be strategically placed, have the ability to enhance their revenue through personal or business events, or have something interesting about them that will push them to the top of people’s list. If you want people to stay in your hotel, it shouldn’t be just a box with beds,” Jumabhoy explains. 

Beyond these factors, ProsperCap also considers hotels that can be expanded or upgraded to increase their value. “When I think about our growth in the coming years, it will come through these things: value enhancement via asset improvement, and strength in the domestic travel market, with the boost from events being the icing on the cake.”

While international travel continues to recover after the Covid-19 pandemic, the firm will also ensure that its portfolio of hotels continues to cater to a balanced mix of foreign and domestic leisure travellers and business clients, for resilience in the long run. “We have a good balance now, not in every hotel but across our entire portfolio, and we want to maintain that.”

Growing with support from others

As ProsperCap charts its future, it is also benefiting from the support of the DTGO Group, its parent company and major shareholder. The Group is a Bangkok-based conglomerate with a variety of businesses, in fields from property development and design and construction to finance and investment, commerce and technology, and entertainment and communication. 

Jumabhoy shares: “DTGO has deep strengths in hospitality, but more than that, it is very well-known and involved in some of Thailand’s largest development projects. The consequence of that is that every investment banker wants to show the Group deals. Lots of private individuals and owners want to talk to it because of its reputation for ethics, quality and completion.”

“It gets calls and offers of properties that we get to explore too. This creates opportunities for us, including to buy off-market properties, that may not be available to our rivals.” ProsperCap is assessing potential investment opportunities emerging within the United Kingdom, in some cases at attractive yields.

ProsperCap also leverages on other partnerships for an edge in the hospitality sector. Its hotels are operated under franchise agreements with globally renowned hotel brands, namely IHG, Hilton and Marriott, and are managed by Valor Hospitality Europe, a leading hotel operator with extensive international experience. 

Jumabhoy highlights that Valor has over a decade of hotel management worldwide under its belt. “The people at Valor have, between them, lifetimes of running hotels, and the company has been used by several funds that acquire hotels and need a management partner, so we are in very good hands.”

“Another great thing about Valor is that it has all the skills you need in operations, marketing and revenue management, as well as the IT systems to support all that, and more, but it is not tied to any particular brand. This means that we can adopt the best and most appropriate brand for each of our hotels.”

Building a business for good

In line with the DTGO Group’s commitment to be a “business-social” organisation that gives back to society – it pledges two per cent of its topline revenues to philanthropy through its DTGO Do Good Group which supports non-profits in education, healthcare, sustainability and other efforts – ProsperCap aims to contribute to a better world too. 

Environmental, social and governance principles are part of the core values of both the DTGO Group and ProsperCap, Jumabhoy says. “We’re converting the power sources for our heating and lighting needs to cleaner ones, using more energy efficient technologies, and so on. Apart from the sustainability dividends, the financial savings are substantial.”

He points to ProsperCap’s ongoing deliberation to switch to a more eco-friendly fuel source for one of its hotels’ boiler units. “After some calculations, we’ve found that the savings would be tremendous if we made the change. By being creative about how to pay for it, for instance by giving away some of the future savings, we also wouldn’t have to spend any money.”

The company also encourages its staff to help one another. “When people lend each other a hand, we can all do our jobs better. For businesses, putting in the time and resources to foster a supportive work environment will also pay off through greater engagement with staff, lower turnover rates and other gains.”

Over the next few years, ProsperCap plans to extend its portfolio of hospitality and hospitality-allied assets. “Within hospitality itself, you have hotels of various types, so there is plenty of room for us to grow. We also haven’t ruled out going into other lodging-related spaces, such as serviced apartments.”

Jumabhoy continues: “We will also access a much wider range of financial possibilities, so that we can provide more financial options for those who believe in us to invest in us. This is the amazing thing about the hospitality business, and why I’m still excited about it after decades in the industry: it’s development, management and investment all rolled into one.”

About Prosper Cap Corporation Limited

Prosper Cap Corporation Limited plans to grow its presence as owner and manager in the global hospitality and lodging-related market. The Group currently owns a portfolio of 17 predominantly upscale hotels with a total of 3,383 keys located in key regional cities in the United Kingdom, with two of the hospitality assets located in Scotland and the remainder in England. The hospitality assets are managed by a leading hotel operator experienced with international and multi-brand hotel portfolios and operated under franchise agreements with well-known international hotel brands, namely Hilton, IHG and Marriott. Future strategic initiatives include expanding the portfolio and enhancing guest experiences. The Group is committed to a long-term value-added investment strategy that focuses on innovation in keeping with its financial and societal objectives for sustainable operations.

The company’s website is https://www.prospercap.com/