Target Information

The collective investment aimed at hotel rehabilitation is gaining traction alongside the robust recovery of the tourism sector post-COVID-19. This initiative, facilitated through the Canarias Investment Reserve (RIC), allows investors to pool resources for hotel renovation projects without direct ownership of the establishments. Instead, they earn future returns derived from the utilization of RIC funds, which have been a significant tax incentive in the Canary Islands since the 1994 legislation. Enrique Guerra, the General Director of RIC Private Equity, noted that his firm, established in October 2019, faced immediate challenges following the onset of the pandemic, leading to a halt in tourism and administrative operations. As a result, only one of five planned projects was completed so far.

Industry Overview

The tourism industry in the Canary Islands has displayed signs of recovery, driven by the desire to enhance service quality in the aftermath of the pandemic. This landscape presents an opportune moment for collective investments, particularly in the rehabilitation of hotels, which have attracted interest from various stakeholders aiming to improve their offerings. Companies within this sector, like Servatur, are actively seeking funding through RIC to reposition their hotels and meet the demand for higher quality accommodations.

For instance, Servatur is currently involved in the rehabilitation of Puerto Azul, located in Puerto Rico (Mogán, Gran Canaria), with a projected investment of 34 million euros. This project exemplifies how RIC funds can facilitate timely renovations, allowing hotels to reopen with updated amenities that cater to evolving consumer expectations post-COVID. Such developments are critical in a competitive environment, where outdated facilities may lose relevance.

In addition, Hotel AC in Santa Cruz de Tenerife represents a successful example of RIC-funded initiatives. Housed in a reformed commercial building, the project showcases how collective investments can energize the local economy by attracting new investors who may struggle to utilize their fiscal savings in other ways. This model is poised to stimulate growth and revitalize the tourism market in the region.

Rationale Behind the Deal

The recent uptick in fund availability through RIC is strategically aligned with the current climate of economic recovery, as it provides crucial financial backing to projects that would otherwise face significant barriers to entry. With legal frameworks offering enhanced security for collective investments, coupled with favorable repayment terms—such as deferred principal repayments for six years—investors are more likely to engage in projects that promise substantial returns over time.

As travel resumes, there is an increasing need for quality accommodations, making the case for investments that aim to upgrade existing properties more compelling than ever. For stakeholders in the tourism industry, leveraging RIC funding presents a pathway to meet the rising expectations of travelers returning to the Canaries.

Investor Information

RIC Private Equity, the pioneer in collective investment management within this framework, has positioned itself as a key facilitator for the rehabilitation of the Canary Islands' hotel sector. With a focus on connecting medium-sized entrepreneurs, professionals, and larger companies that currently lack expansion projects, RIC aims to mobilize the necessary capital for revitalizing tourism infrastructure.

The firm operates under a regulatory regime that ensures transparency and legal robustness for collective investments, receiving authorization from State and Regional authorities. This solid foundation enables RIC to foster investor confidence and efficiently channel funds into priority projects that align with broader industry objectives.

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The collective investment model represented by RIC could very well be a transformative opportunity for the Canaries’ tourism sector, particularly in the context of post-pandemic recovery. By enabling stakeholders to collaborate on significant projects, it allows for larger-scale renovations that can attract higher-caliber tourists, thereby enhancing the region's reputation and economic viability.

The RIC funding structure offers a unique blend of minimal initial financial pressure and potential high returns, which is particularly appealing to investors wary of immediate risks. Additionally, the regulatory support provided by local authorities enhances the credibility and attractiveness of such investments.

As the tourism industry continues to rebound, the emphasis on quality means that properties that engage in RIC-driven renovations will likely differentiate themselves in a crowded market. This positions RIC-funded projects not only as viable investments but as critical components of the Canary Islands' broader economic recovery.

In conclusion, the trajectory indicated by the initial success stories within the RIC framework—such as the AC Hotel project—suggests that this model is not merely an innovative funding mechanism but a vital strategy for revitalizing and future-proofing the tourism sector amidst evolving consumer preferences.

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