Target Information

The group of shareholders has invested seven million euros to transform a two-key apartment complex into the four-star Hotel Merlín, located in Adeje, Tenerife. The construction and real estate firm Acosta Matos is revitalizing the region's accommodation sector amidst the ongoing pandemic. In a significant initiative, they have converted the former Maya building in the capital of Tenerife into a hotel facility, and now aim to repurpose a closed and outdated apartment complex into a new family-oriented hotel. The Hotel Merlín is set to open in the winter tourist season of 2021.

This project will feature 165 rooms, accommodating over 320 guests, and will include amenities such as a gym, two restaurants, two bars, two swimming pools, and a covered chill-out area. The transformation is anticipated to create nearly 100 construction jobs and approximately 100 direct employment opportunities once the hotel opens, significantly contributing to the local economy.

Industry Overview in the Canary Islands

The tourism sector is a vital component of the Canary Islands’ economy, accounting for a substantial share of employment and gross domestic product (GDP). Despite the challenges posed by the COVID-19 pandemic, there is a renewed focus on enhancing the hospitality offerings in the archipelago. Investments from private entities, such as RIC Private Equity, highlight the ongoing commitment to the sector's recovery and development.

In recent years, the region has faced competition from other tourist destinations, prompting local businesses to innovate and improve their services. The push for sustainable tourism is reshaping the industry, with investors keen to support initiatives that prioritize eco-friendly solutions and improved guest experiences. Projects like Hotel Merlín are a response to this evolving landscape, aiming to attract a new generation of travelers.

Furthermore, the collective investment model introduced by RIC Private Equity allows multiple investors to contribute to tourism projects. This collaborative approach can mitigate individual financial risks while bolstering the sector's resilience. The focus on high-quality developments, such as the Hotel Merlín, exemplifies the commitment to upgrading and modernizing the Canary Islands' hospitality infrastructure.

Rationale Behind the Deal

The deal structure is designed to provide significant financial flexibility. By partnering with RIC Private Equity, Acosta Matos gains access to an alternative funding source that allows them to repay investors after five years, thus ensuring liquidity during the initial operation phase of the hotel. This innovative financing mechanism is a strategic response to the current economic climate, enabling growth in a sector that is crucial for the region's recovery.

In addition, the investment model offers a unique benefit to investors. Rather than solely relying on financial returns, investors can elect to receive real estate assets from ongoing projects if they prefer, thereby enhancing their investment portfolio and reducing exposure to market fluctuations.

Investor Information

RIC Private Equity is the first collective investment entity in the Canary Islands, established in 2019 by a consortium of prominent island entrepreneurs, including Francisco López, a leading figure in the tourism and construction sectors. Their mission is to provide opportunities for fellow business professionals to pool their resources for strategic investments in local companies.

The firm focuses on businesses with solid growth prospects, particularly in essential sectors like tourism and renewable energy. With a keen focus on viable expansion projects, RIC Private Equity seeks to align economic interests and support the sustainable development of the Canaries’ economy. Their experience and insight into local market dynamics position them as a valuable partner for ambitious projects like the Hotel Merlín.

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The collaboration between Acosta Matos and RIC Private Equity has the potential to be a sound investment, given the strategic importance of the tourism sector in the Canary Islands. The transformation of the Hotel Merlín into a modern four-star hotel not only addresses an urgent need for high-quality accommodations but also capitalizes on the anticipated rebound of the tourism industry.

The project’s comprehensive plan includes a robust service offering, catering to diverse guest needs, which could ensure high occupancy rates and prolonged visitor engagement. By revitalizing an outdated complex, Acosta Matos contributes to enhancing the overall appeal of Adeje as a tourist destination, potentially leading to increased footfall and economic stimulation.

Furthermore, RIC Private Equity's innovative funding structure mitigates risk for investors, as they offer avenues for asset recovery instead of straightforward capital repayment. This aspect strengthens the attractiveness of the investment, providing a cushion against financial uncertainties that may arise during the project lifecycle.

In conclusion, the Hotel Merlín project represents a promising opportunity for stakeholders involved, with its strategic location, solid backing from established investors, and a well-thought-out operational model poised to yield positive returns. The transformation aims to create substantial economic benefits and elevate the standard of accommodation in the Canary Islands, making it a commendable investment in the long-term outlook of the tourism sector.

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