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AGO cites strong industry appetite for hybrid lease model

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AGO insists its rapid growth points to a rising level of demand for alternative lease platforms across the hotels industry after it announced the addition of three new UK hotels.

This growth milestone means AGO now operates across 14 locations and 1,000 rooms in England, Wales, and Scotland.

The new hotels include the former Grange Bracknell Hotel, the Orchard Hotel in Gloucester and the former Travelodge Thurrock M25.

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The addition of these new hotels represents an increase in AGO’s number of rooms by more than 90% in just 10 months.

Since launching in December 2020, the company has expanded to a team of almost 200 staff, with growth fuelled by a recovery in the UK hotel sector and the strength of AGO’s lease model.

AGO has reported a 28% increase in occupancy across its portfolio in Q3 of 2021 versus Q2 2021, kick-started by an influx of ‘staycation’ bookings and boosted by the return of business travel as Covid-19 restrictions have eased.

AGO said its growth demonstrates the appetite for alternative lease platforms across the hotel sector.

The addition of Grange Bracknell represents an expansion for AGO into the full service, aparthotel sector, demonstrating the broad appeal of AGO’s distinctive hybrid lease model, which benefits landlords both in valuation and yield terms.

AGO’s 25-year FRI leases offer a combination of guaranteed fixed rents, together with genuine profit participation, calculated on the basis of each hotel’s EBITDA.

Viv Watts, co-founder of AGO Hotels, said: “Reaching 1,000 rooms in our portfolio is an early growth milestone for our business, with much bigger goals in mind. When we launched AGO in 2020, we were confident our hybrid lease model would be attractive to real estate investors as well as hoteliers and it is wonderful to see the vision bearing fruit.

“We have proven our ability to deliver rents in weak markets, not least throughout the 2021 Covid-19 lockdown, and look forward to paying profit rents to our landlords in the months ahead. We are actively engaging in development opportunities, including new builds, conversions, and leasing existing franchise assets, as investors realise the multiple benefits of our hybrid lease structure.”

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Andrew Seymour

The author Andrew Seymour

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