As part of its expansion plan, Ago Hotels has announced the addition of three new UK hotels. The growth milestone means it now operates across 14 locations, totalling 1,000 rooms in England, Wales and Scotland.

The first of the trio is The Lexicon, an 80-key hotel in Bracknell’s town centre with a further 40 aparthotel rooms featuring kitchen facilities, lounges and dining areas. The property also comprises large conference suites and meeting rooms with a conference capacity of up to 600, a bar, restaurant and outdoor terraces.

The Orchard Hotel Gloucester meanwhile offers en-suite facilities across 60 rooms, as well as private parking and access to the M5, while the former Travelodge Thurrock M25 – located within the Thurrock Services near Lakeside Shopping Centre – now provides 47 rooms, free parking and good transport links into London.

The addition of these new sites represents an increase in Ago’s number of rooms by more than 90% in just 10 months. Since launching in December 2020, the London-based 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.

It has also 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 across the UK.

Appetite for a new approach to hotel leases

Ago’s rise indicates the level of demand for alternative lease platforms across the industry, while the addition of Grange Bracknell signifies its expansion into the full service aparthotel sector, demonstrating the appeal of its hybrid lease model, which benefits landlords both in valuation and yield terms; the company’s 25-year FRI leases offer a combination of guaranteed fixed rents, as well as genuine profit participation that is calculated on the basis of each hotel’s EBITDA. Aligning the interests of investors and a major hotel brand, its first partnership with Accor resulted in the rebranding of nine economy hotels under Ibis Budget.

“Reaching 1,000 rooms in our portfolio is an early growth milestone for our business, with much bigger goals in mind,” comments Viv Watts, co-founder of Ago. “When we launched 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 Covid-19 lockdown earlier this year, 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.”

Fellow co-founder, Lionel Benjamin, adds: “The team are delighted to add these three hotels to our portfolio, strategically located across key regional hubs. These additions to the portfolio demonstrate a continued and growing confidence within the hotel sector, and stronger returns in occupancy as we emerge from national lockdowns and the lifting of travel restrictions. Ago is in a significant phase of growth as we welcome guests into our new hotels and continue to look for new opportunities across the UK. The signing of these additional hotel is testament to a model which has paid rents through Covid and will deliver profit rent for Q3.”