Vantage Capital invests $23 million in PickAlbatros Hotels

3 min read
  • PickAlbatros has a portfolio of about 10,000 rooms across the Red Sea resort towns

  • Vantage Capital partner David Kornik expects international beach tourism to pick up

Vantage Capital, Africa’s largest mezzanine fund manager, announced Tuesday that it has provided $23 million of mezzanine debt funding to PickAlbatros Hotels.

The proceeds will be used to fund working capital and renovation work on several recently-acquired hotels.

PickAlbatros is a leading hotel owner and operator in Egypt, with a portfolio of 15 operating hotels and close to 10,000 rooms across the Red Sea resort towns of Hurghada, Sharm El Sheikh, Sahl Hasheesh and Marsa Alam.

It also operates two hotels in Morocco. The Red Sea has become an increasingly popular tourist destination, especially amongst Europeans looking for an affordable beach holiday offering year-round sunshine, warm water and world-class diving and snorkeling.

In fact, more than half of all tourists arriving in Egypt head directly to the Red Sea, and total tourist arrivals into the country have grown by over 140% from 2016 to 2019. PickAlbatros has played an important role in contributing to tourism growth in the region, through its ever-expanding portfolio of high-quality 4-star and 5-star hotels that include beachfront access, extensive networks of swimming pools and the largest water parks in the area.

The hotel group has recently acquired five further hotels and part of Vantage’s funding will be used for renovations as the hotels are prepared for re-launch under the PickAlbatros brand.

Since the first PickAlbatros hotel opened its doors in Hurghada in 1992, Kamel Abu Ali, the owner and CEO of PickAlbatros, is said to have pursued building a high-quality hospitality portfolio across the Red Sea.

His efforts in this direction are believed to have put Hurghada on the map as a popular destination for European sunseekers.

“We have always taken a long-term view on the growth potential for the hospitality market in the Red Sea and we have successfully delivered on this growth strategy, consistently expanding our hotel portfolio over the past three decades,” Abu Ali said.

David Kornik, partner at Vantage Capital, said the Covid-19 has created significant disruption to the global hospitality sector over the past year. But his firm also recognized that the longer-term growth potential for PickAlbatros Hotels remains firmly intact.

“The resilient performance delivered by the hotel group in recent months, despite widespread travel restrictions across its core European market, highlights the appeal of its high-quality, value-for-money offering across a broad range of markets,” he said.

He added that international beach tourism is likely to recover as vaccines become widely distributed.

“Egypt’s Red Sea is well-positioned to be an outsized benefactor over the years to come,” he said.

The transaction represents Vantage Capital’s 31st investment across three generations of mezzanine funds, with its portfolio now spread across eleven countries in Africa.

Warren van der Merwe, Managing Partner at Vantage Capital, added the transaction with PickAlbatros marks the firm’s inaugural investment into Egypt.

“With a population in excess of 100 million and an economy delivering robust growth, it is a country with significant potential and valuable addition to our investment map. Tourism is a key sector within the economy and we are proud to back one of the leading local hospitality players,” he said.