If you're a frequent traveler, you may have heard of the Fairmont brand. But have you heard of the Fairmont Golden Prague? Jakub Dyba, Head of New Investments at R2G, shares the story of how they acquired the Intercontinental Hotel in Prague four years ago and turned it into a luxurious Fairmont hotel that is set to open its doors in 2024.

R2G's investment strategy is centered around conservative, cross-generational assets that prioritize value preservation over rapid growth. Despite not planning to invest in hospitality initially, they saw an opportunity to acquire a prime location in Prague and took it. After organizing a competitive tender process, they chose the Fairmont brand to manage the hotel's future, and Jakub believes it will become a clear leader in the Prague hospitality market.

But R2G's plans don't stop there. They have been in close contact with local authorities to discuss the final look of the surrounding areas and have plans to open two new buildings adjacent to the Fairmont Golden Prague. Jakub emphasizes the importance of location in future investments and says they have looked at opportunities in different capital cities.

As a traveler, the opening of the Fairmont Golden Prague is something to look forward to. But as an investor, R2G's investment strategy and success in the hospitality industry provide valuable insights into the importance of value preservation and strategic partnerships.

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Transcript

Marina Franolic (00:00:27) - Hello everyone and welcome again to the IDEEA podcast. Today I have a pleasure to welcome Jacob Dyba, who is the head of New investments at R2G and R2G is a family office and wealth manager established in 2016 based in Prague. Welcome, Jacob.

Jakub Dyba (00:00:50) - Thank you very much. Nice to be with you.

Marina Franolic (00:00:54) - Uh, can you tell us a little bit about R2G?

Jakub Dyba (00:01:00) - Well, as you said, we are a family office based in Prague. We were established in 2016. It was a consequence of some large transactions that our families we work for did in that year. Our three principal families are are families of Czech successful entrepreneurs. One is Aldrick Schlemmer, who is a former owner of or co-owner to be more specific of a group which was that time second largest producer of off road tires globally in the world.

Jakub Dyba (00:01:37) - And two other families are families of Mr. Edward Kucera and Mr. Powell, who are founders of Avast Software. Um, and they basically these families joined forces in 2016 to be able to, you know, co-invest together to focus on large transactions. Um, and, and we became their team because many of, many, you know, members of our team are former lawyers, tax specialists, investment bankers. And we basically started working exclusively for, for these three families, you know, assisting them when they are making their next investment.

Marina Franolic (00:02:32) - And when did you start investing in hospitality and has that changed during Covid? Have you started looking more into hospitality investments or maybe less?

Jakub Dyba (00:02:43) - Well, we always our investment mantra, so to say, is investing conservatively in a in a, you know, kind of cross generation type of assets because we invest to hold. We don't invest to sell. We are very different from private equity players or financial sponsors. Uh, and, and therefore, you know, we work with the kind of value preservation, uh, investment thesis rather than, uh, you know, massive value growth.

Jakub Dyba (00:03:19) - So from that perspective, we invest into very conservative types of assets and uh, you know, hospitality or hotel, in our understanding of what the, what the conservative means really is a very conservative type of investment. So, um, it was not really intended, uh, that we would invest into, into the hotel. Um, but when the opportunity came some four years ago now it's going to be three and a half, four years ago, then we, you know, we just took advantage of that opportunity. And, and we, we, we entered into discussions with the, with the owner at that time and, and eventually, um, you know, acquired Hotel Intercontinental at that time with all the adjacent areas that belong to the hotel. Uh, and, and those are, I would say, high profile, you know, city center areas. Um, and, and we became investors into hospitality. Um, it was not really, really related with Covet anyhow, although Covid influenced us heavily, obviously, because we, we close the deal and some, you know, three, four months after that, uh, Covid came really.

Jakub Dyba (00:04:51) - So we were forced to reconsider our plans for this investment and we actually speeded up and accelerated, uh, intended reconstruction and revitalization of the whole area. Uh, we did not wait for a couple of years, which we originally thought or planned. And then we, we just went, we just quickly closed the hotel during the Covid because we kind of were worried that it's going to be it's going to take a long time. And we were right in that, fortunately. Um, and then we simply started reconstruction straight away.

Marina Franolic (00:05:33) - Let me just go back a little bit. You said that initially you didn't plan to invest in hospitality, so what were the asset classes that you were looking at?

Jakub Dyba (00:05:43) - Well, um, we always felt like more like industrial investors in a very wide understanding or extensive understanding of what industrial means. Uh, so our main investments, besides some other investments that we have was investment into nonwovens. Uh, textiles. Okay. Uh, where we did two large transactions, consecutive transactions into assets, one in Europe and one in the US and Asia.

Jakub Dyba (00:06:19) - And we combine these assets into one and created one of the global leaders in, um, in production of Non-woven Textiles. Those are for hygiene purposes. Um, so, so that's, that's an example of industrial investment. Uh, other than that, we, uh, also are large investors that we have always been large investors into global private equity funds. Uh, where we, we have a large platform here which is selecting carefully all these, um, managers of private equity funds. And, and from that perspective, we are investors into uh, you know, kind of passive type of or we are passive investor into, into specialists, into different sectors. And where we get exposure to these sectors via these private equity investments, basically.

Marina Franolic (00:07:25) - Very interesting jump you made to hospitality. And now that Intercontinental is in, um, under complete renovation when it reopens, it actually won't be the Intercontinental anymore. It will be the Fairmont Golden Prague. When do you plan for the reopening to to happen and why did you choose the Fairmont brand?

Jakub Dyba (00:07:51) - Um, the reopening is planned for summer 2024. Okay. So after, say, four years of closure and, um, four and a half years of closure and. And then why did we choose Fairmont? We actually, when we. When we did the deal, uh, we, we organized two tenders straight away. Then the number one was for, um, kind of architectural solution of the whole area. Um, and then number two was, uh, related to rebranding because we were never happy with, uh, or we, we kind of always thought, uh, we always thought that the hotel, uh. Deserves. Besides the construction, also a kind of a new say, a vision from, you know, for for the manager basically. And and we organized a tender where we had a lot of global names participating, uh, to, you know, for the new manager of the hotel. And that eventually was worn by Accor group with its brand, Fairmont. Um, and they, they convinced us with their plans for, for the hotel.

Jakub Dyba (00:09:17) - It was a very important investment for Accor group in the region for Fairmont brand in the region because this is the only Fairmont in Central and Eastern Europe. Um, also Fairmont is not that present that, that much present in Europe at all actually. So it is it was always a very important project for Accor group and for Fairmont brand which was convincing. They, they also presented a very credible plan for the hotel for the future. And we, we believe in this plan. And, and we also were convinced by the team of people that they, uh, that that they had on board. So overall, they presented the best offer in a very competitive tender situation because we had a lot of global top luxury brands participating in that in that standard time.

Marina Franolic (00:10:13) - And how do you see this new hotel in the Fairmont brand acting in the Prague hospitality market?

Jakub Dyba (00:10:23) - Well, we very much believe it's going to be it's going to become a clear leader on the hospitality market because it arguably is located in the best location.

Jakub Dyba (00:10:33) - Really. Uh, it was the location which kind of also, uh, you know, helped us, uh, to be able to pay the price that the seller asked for. So we, we very much believe in that location. Um, the history tells us that this was always the hotel, uh, where, um, at the time of its glory under Intercontinental brand, uh, the important guests were coming there always. So we, we are, we are convinced that we are going to attract guests from all different, you know, guest groups. Um, and obviously this is going to be the newest product on the market. This is going to be a very high profile product. Um, we have the biggest Congress, uh, space in the Prague one district, which is quite unique. Uh, so that also gives you opportunity to serve guests, uh, from the kind of Congress tourism area. Um, and then, and we believe we also have a, a very experienced management that was nominated by Fairmont Accor.

Jakub Dyba (00:11:57) - Uh, so we are convinced that, that, you know, Fairmont, Golden Prague will eventually become the clear leader on the hospitality market and did not mention one more thing. We have several um, new gastro concepts that we that Fairmont is bringing. And then, then we, we very much believe that we'll be able to attract also, uh, local people. Uh, and the hotel will be very kind of democratic, so to say, and inviting for, uh, for general public and for local people to, you know, visit and to spend time and spend money also in the hotel.

Marina Franolic (00:12:38) - That became a big revenue generator. And I believe that hotels actually realized how important the local market also is during Covid times. So definitely sounds like a great project. Uh, and I don't know if you if you're aware, but it is planned to be in Prague every second year, which means 2023, 2025. And if you're going to have the largest conference center, then we definitely need to sit down and see how we can work together.

Marina Franolic (00:13:10) - Uh, but before the next IDEEA, can you tell me so what are your next plans? Now you've started with hospitality investments. This is not renovated yet. Not opened yet. So you don't have the results, but do you have any further plans? And is there any other market in the region that you're looking at that you find attractive for hospitality?

Jakub Dyba (00:13:35) - Yeah. Um, well. Um, we have a lot on our plate now with this hotel. Yeah. So we we 100% focus on completion of reconstruction, renovation and revitalization of, of the space because as I said, this is not only reconstruction of the hotel and a hotel opening, but this is also a massive development project as we are going to open to hopefully two new buildings in the in the adjacent areas to the hotel. And uh, and we have been in close contact with local authorities of the city of Prague and Prague, one district, obviously. Um, and, and we have been discussing the final look of this part of Prague as we very much believe that not only us, but also the city of Prague and the Prague one district are um, or it's in their long term interest to kind of make this part of Prague, which was always kind of the, uh, the part of Paris Street close to the riverbank, which was not completed.

Jakub Dyba (00:14:52) - The interest of everyone is still to complete it, to make it part of the city and to, you know, create a lively place. Yeah. Um, so we have still a lot on our plate to do with this project. Um, having said that. Uh, we have looked at other opportunities in hospitality in different regions in, uh, in different capital cities. Um, so I, I think we are pretty open to consider, you know, more investments into hospitality. Um, and for us it's always about location. I think the location really is the most important criteria for our decision making. Um, so I believe that once we advance further with the reconstruction and revitalization, we will be also more responsive to various different, um, investment ideas in different locations.

Marina Franolic (00:15:59) - Well, location, location, location has always been the, the main point for real estate. And I don't think that that will change anytime soon. Jacob. Very interesting story. Very interesting project.

Marina Franolic (00:16:12) - I'm very much looking forward to seeing the the new Fairmont next year in Prague. Um, I will invite everyone to hear more maybe about this project and discuss also other investments at IDEEA in September. I know Jacob will most probably not be able to join, but I hope maybe if anything changes that you will, you will join us. Uh, September 18th to 20th. It is at the Marriott Prague. Jacob, thank you so much. Once again, I'm sure we're going to be hearing a lot more not only about the Fairmont in Prague, but also about investments in hospitality. And I'm really looking forward to it. Uh, thank you for today. It was a pleasure talking to you, and I'm looking forward to actually meeting you in person sometime soon.

Jakub Dyba (00:17:07) - Thank. Thank you for having me. And good luck with the conference.

Jakub Dyba (00:17:10) - Thank you.

Marina Franolic (00:17:12) - Bye bye.

Jakub Dyba (00:17:13) - Cheers. Bye bye.