The brainchild of founders Lionel Benjamin, an experienced hotelier, and entrepreneurial investor Vivian Watts, AGO’s hybrid profit lease currently has 15 properties in its fold catering to the comfortable and affordable budget market.
AGO’s 25-year lease structure, which suits older properties, “is designed to include a guaranteed base rent where the landlord receives a fixed amount as well as a share of the profit produced by the property too,” explains Benjamin.
“The overriding purpose is to align the interests of real estate owners and investors with those of the management and brands, all in an effort to drive long-term value by maximising revenues, rents and asset values.
“AGO is asset-light and as far as we know we are just one of a kind in the UK designed this way.
“All responsibility however is down to us through capital investment, repairs, maintenance and management. We commit to paying the rent in line with upwards-only inflation and offer a 50 per cent profit share based on the hotel’s trading.
“One of the key benefits we deliver is to landlords, through the capital investment that removes potential stressful expenditure for them and supports valuations.
“For our part we take no profits or fees until all other agreed costs are shared out. It’s a proposition proving attractive to banks and valuers.”
The business launched in 2020 in response to the closures caused by the pandemic and increasing demand for a new kind of lease platform.
Working alongside its partner brand global group Accor, the company is forecasting a turnover of circa £11m to £13m.
With a team of 180 and 1000 rooms in its portfolio, staff who wished to stay after it took over a lease were able to remain in post.
Although rewriting the rule book always meant challenges, “getting understanding about what we were doing was like pushing water uphill at first,” says Benjamin.
“We aren’t a spreadsheet exercise, but bricks and mortar reality with a lot of variables to align.”
Economic conditions remain tough however, and for AGO costs are accelerating with the chief foes “interest rates, inflation, energy costs and business rates – in that order”, declares Benjamin.
Now the company is looking to broaden its base and eyeing co-ownership and then asset management with the student accommodation and assisted living sectors possibilities later on too.
