MHP Hotel AG (MHP) is the leading white-label hotel operator in the premium segment in the DACH region. The company hereby acts as the crucial link between investors (e.g. DEKA, DWS, Union Investment), who aim for strong brands to market their funds and hotel chains (e.g. Marriott, Hilton) on the other side, who oftentimes refrain to sign lease agreements to protect their balance sheet.

Thanks to a strong track record since its foundation in 2012, MHP gained a renowned reputation among both investors and hotel chains of being the go-to operator in the aforementioned segments. As a result, MHP has prime access to this premium and luxury niche market, which represents a significant entry barrier for competitors. MHP’s strong market positioning is complemented by its own boutique hotel brand MOOONS (first hotel opened in 2021 in Vienna) as well as selective co-investments, where the company takes a minority stake in the property as well.

This reputation has not only positioned MHP as a leader in the hospitality industry but also has translated into outstanding operational performance, which is evident in industry-leading average daily rates (ADR) of € 213 in Germany in 2023. This puts the company far ahead of competion (2^nd is DSR with € 184), clearly demonstrating the company’s quality and pricing power.

Currently, MHP has 10 hotels in the portfolio, whereof 2 are co-investments and 1 that runs under the MOOONS brand. In addition, the company currently has two hotels in the signed pipeline: (1) The Conrad Hamburg, MHP’s first hotel under the Hilton brand, will be opened in 2025, while (2) the Autograph Collection Hotel as part of the Schlossquartier in Stuttgart will be opened in 2028. All hotels are located in prime locations in major cities in the DACH region and are perfectly suited for both business trips and leisure, which is reflected in the c. 50:50 guest split between the two segments. This balance offers another advantage, as it acts as a hedge for fluctuations in business and tourism seasons.

Against this backdrop, MHP is poised for continuous dynamic sales growth (eNuW: 15% CAGR FY22-27e) and margin expansion (eNuW: +6.4pp adj. EBITDA margin FY22 vs ‘27e), resulting in appealing returns for shareholders (eNuW: FY30e ROIC of 13.3%).

In light of this, current valuation appears highly attractive at only 4.5x EV/adj. EBITDA FY25e. We hence initiate coverage with BUY and a € 3.00 PT based on DCF.