Information on the Target

The target of this deal is the Puerto Azul Hotel, owned by the hotel chain SERVATUR, located in the popular tourist destination of Puerto Rico in the southern region of Gran Canaria. The hotel is undergoing a significant renovation and expansion project, valued at approximately 34 million euros. Recent discussions clarify that only around 3.4 million euros of this valuation have been financed through the Canary Islands Investment Reserve (RIC) so far, covering construction work completed in the past five months. The planned investment by SERVATUR is expected to range between 6 and 8 million euros from January to March 2022.

RIC Private Equity has been instrumental in facilitating this financial undertaking by seeking the required declaration of suitability from the Canary Islands government, alongside a favorable binding report from the State Tax Agency for this funding initiative.

Industry Overview in The Target's Specific Country

The Canary Islands' hospitality sector has been significantly impacted by the COVID-19 pandemic, which has led to a decrease in tourist arrivals and a subsequent decline in revenue. However, as recovery progresses, the region shows promise for growth, driven by increasing interest from both domestic and international visitors. In recent months, various measures have been implemented to revitalize the industry and ensure sustainable tourism moving forward.

The government of the Canary Islands has been proactive in its support for the industry through financial incentives like the RIC, which enables local investors to contribute to development projects. These measures are aimed not only at enhancing hotel facilities but also at creating job opportunities and promoting the region as a tourist destination.

With a backdrop of legislative support and strategic investments, the hospitality industry in the Canary Islands is poised for recovery and sustainable growth. The planned renovations at the Puerto Azul Hotel reflect a commitment to improving the quality of services offered, which is essential for attracting visitors in a competitive market.

As the recovery continues, ongoing investments are crucial for repositioning the Canary Islands as a sought-after destination and addressing the evolving needs of travelers who seek high-quality accommodations.

The Rationale Behind the Deal

The rationale behind this deal stems from the need to rejuvenate the Puerto Azul Hotel, which is integral to the tourism infrastructure of the region. By securing funding through the Canary Islands RIC, RIC Private Equity is enabling SERVATUR to enhance its property, yielding both immediate economic benefits and long-term value. The ongoing renovations are expected to improve occupancy rates and revenue potential, which will ultimately contribute to the overall economic revival of the locality.

Furthermore, the Canary Islands’ governmental support, illustrated by the issuance of the necessary financial approvals, signals a commitment to bolstering the region’s hospitality sector, ensuring that investor interests are aligned with regional development goals.

Information About the Investor

RIC Private Equity is the first collective investment society in the Canary Islands, focused on facilitating investments in local projects through the RIC framework. The organization is led by general director Enrique Guerra, who emphasizes the role of the RIC in fostering hospitality sector developments. Through targeted investments, RIC Private Equity aims to support comprehensive economic growth within the Canary Islands while maximizing returns for its investors.

As a key player in soliciting and managing investments that qualify under the Canary Islands’ tax incentives, RIC Private Equity plays a pivotal role in the region's recovery efforts post-pandemic. Its approach exhibits a strong commitment to enhancing local infrastructure while aligning with broader governmental initiatives aimed at revitalizing the economy.

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The investment into the Puerto Azul Hotel renovation project appears to be a strategically sound decision for RIC Private Equity. Given the substantial projected investment and the supportive government framework, this deal has the potential to yield significant returns as the tourism sector rebounds. The enhancements catering to changing traveler preferences are likely to position the hotel as a preferred choice among visitors.

The involvement of the government through the RIC not only reduces the financial burden on the investor but also underscores the alignment of interests between public and private sectors, fostering an environment conducive to growth. RIC Private Equity’s expert management and strategic vision further solidify the prospects of this venture.

Moreover, with ongoing initiatives to extend the investment deadlines associated with the RIC, this could provide additional flexibility and security for investors. This approach aligns itself with experiences from previous fiscal incentives where such extensions have proven beneficial during challenging economic conditions, particularly in light of the COVID-19 pandemic.

Ultimately, the renovation and expansion of the Puerto Azul Hotel exemplifies a proactive investment in the future of the Canary Islands' hospitality sector. With ongoing governmental support and increasing consumer interest, RIC Private Equity's investment is positioned to not only recover current losses but also thrive in a recovering market.

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