A London-based investment firm led by an Italian entrepreneur, with an office in Milan and €3.3 billion in assets under management, has helped build a 25-hotel platform in France in just eighteen months. In Italy, it has invested in premium dining, a private members’ club and an amenities supplier. Not in a hotel. The question is not why the capital failed to come to Italy. The real question is why the Italian hotel market has yet to produce enough investable opportunities capable of attracting it.
Some transactions are worth studying not only for what they create in the market where they take place.
They are equally revealing for what they tell us about the markets where they do not take place.
In 2023, Three Hills Capital Partners — the London-based investment platform founded in 2013 by Mauro Moretti, an Italian Bocconi graduate with previous experience at BC Partners and Hutton Collins — invested €61.5 million of preferred capital in Castellet Hospitality, a hotel group headquartered in Marseille.
It was the first investment from Three Hills’ fourth fund and its first transaction in France, following more than two years spent building its presence in the market.
At the time, Castellet operated 22 budget and midscale hotels across south-eastern France, primarily under franchise agreements with Accor, Louvre Hotels Group, Marriott and B&B Hotels.
The company had been founded in 2017 by Gilles Larrivé, an operator with roughly twenty years of industry experience.
Around 75% of the portfolio was economy and 25% midscale, serving a mix of business and leisure demand.
No trophy assets.
No headline-grabbing real estate deals.
No ultra-luxury proposition.
Just a regional hotel operator, a repeatable business model and a credible growth strategy.
The following year came a second tranche of up to €29.5 million, taking the total commitment to more than €80 million.
The additional capital was also intended to support three identified acquisitions: Novotel Lyon Confluence, Hôtel de Mougins and the B&B Hotel in Saint-Jean-de-Maurienne.
Another 261 rooms.
The portfolio grew to 25 locations.
Seven acquisitions in eighteen months.
A regional French hotel company had become a platform with genuine scale.
Meanwhile, in Italy, the same investor — which also has a presence in Milan — has backed Sant Ambroeus, La Bottega di Trecastelli and The Wilde, a high-end private members’ club developed at Villa del Platano in Via dei Giardini.
Premium dining.
Luxury hospitality amenities.
Private membership.
But no comparable hotel consolidation transaction.
And that is where the case becomes particularly relevant for Italy.
The issue is not capital. It is capital structure
Whenever people compare Italy’s hotel market with those of other European countries, the first explanation tends to be predictable.
There are not enough large assets.
There are not enough institutional-quality operators.
There are not enough hotel groups of sufficient scale to attract international capital.
That explanation is only partly correct.
The more fundamental issue is often the mismatch between the financial structure an investor is prepared to offer and the structure an Italian hotel entrepreneur is prepared to accept.
Traditional private equity frequently seeks control positions, or at least governance arrangements that provide significant influence over strategy, management and exit.
For a meaningful share of Italian hotel owners, that is where the problem begins.
A family that has built its hospitality business over two or three generations, often owns a substantial portion of the underlying real estate and sees the company as a long-term industrial and family asset may have little reason to surrender control simply to finance its next stage of growth.
In many cases, the conversation ends before the industrial opportunity is even properly discussed.
Capital solutions attempt to solve precisely this mismatch.
Depending on the transaction, the structure may combine debt instruments, preferred capital, minority equity and governance rights calibrated to the specific risk profile and objectives of the parties involved.
The entrepreneur can retain control and remain in charge of the business.
The investor, in turn, receives a contractually defined return structure, downside protection, governance rights and the ability to contribute actively to value creation.
It is not simply private equity.
Nor is it passive private credit.
It is capital designed around a specific industrial requirement.
In Anglo-Saxon financial markets, this family of structures is generally referred to as capital solutions.
Within Italian hospitality — particularly in the lower middle market — such structures remain far less established and far less widely understood than they could be.
And that is precisely where the opportunity lies.
Why preferred capital could be particularly well suited to Italian hospitality
Italy’s hotel industry has at least three characteristics that make alternative capital structures particularly relevant when compared with a conventional buyout.
It is fragmented, but not necessarily weak
Italy has thousands of operators controlling three, five, eight or ten hotels.
Many own a significant proportion of the underlying real estate.
Some carry relatively modest levels of debt.
Others have strong local brands, deep operational expertise and a proven ability to generate cash.
These are not necessarily businesses in need of restructuring.
They are often businesses that have simply not yet found the right capital to reach the next level of scale.
Financing growth is inherently complex
Consider a family-owned hotel group operating eight properties that identifies another four hotels in the same region that would fit naturally into its portfolio.
The industrial logic is there.
The operating know-how is there.
The acquisition pipeline is there.
But funding the acquisition price, any associated real estate, capital expenditure and subsequent integration may require significantly more capital than the family can provide on its own.
Bank financing remains fundamental to the hotel sector, particularly for the real estate component, but it will rarely cover the entire capital requirement of a broader consolidation strategy on its own.
Additional capital is needed.
And the entrepreneur may have no desire to raise that capital by giving up control.
That is exactly the space in which preferred capital or a broader capital solutions structure can become highly relevant.
Control has a value that investors need to understand
International capital still tends to underestimate one of the defining features of the Italian market.
Reluctance to sell is not necessarily irrational.
For many entrepreneurs, a hotel is not simply an asset to acquire, improve and exit.
It is a business built over decades.
It is an operating platform.
It is real estate.
It is reputation.
And in many cases, it is part of the family’s identity.
Making the surrender of control a prerequisite for access to growth capital therefore means, in many situations, presenting the entrepreneur with the wrong proposition.
Preferred capital can provide an alternative.
It can finance a buy-and-build strategy, allow the operator to remain in control and at the same time introduce greater financial discipline, stronger governance and additional expertise.
There is another particularly interesting feature of the Castellet case: the capital was structured, at least in part, around acquisitions that had already been identified.
First the industrial strategy. Then the capital required to execute it.
That distinction matters.
What would the ideal Italian candidate look like?
The objective is not simply to find a company that owns several hotels.
Growth capital is looking for something more specific.
Looking at the Castellet model and comparable transactions undertaken by the same investor, at least four characteristics stand out.
An entrepreneur, not merely an owner
Gilles Larrivé brought operating experience and a credible entrepreneurial track record.
The investor did not simply finance 22 hotels.
It backed a platform led by someone capable of identifying, acquiring and integrating additional properties.
That distinction is critical.
A portfolio of hotel assets does not automatically constitute a hospitality platform.
A repeatable segment
Castellet’s portfolio was predominantly economy and midscale.
Hotels operating under international brands, with relatively standardised processes and a business model capable of replication.
That does not make luxury less attractive.
Luxury attracts enormous amounts of capital.
But it often follows a more property-specific and real-estate-driven investment logic.
Midscale hospitality, by contrast, can be particularly well suited to an industrial consolidation strategy.
Geographic concentration
South-eastern France.
Not “Europe”.
Not even “France”.
A clearly defined territory in which the group can build operating density, centralise selected functions, generate economies of scale and deepen its knowledge of the local market.
That is the logic of the cluster.
Not the logic of collecting flags on a map.
A real acquisition pipeline
It is not enough to write “growth through acquisitions” in a business plan.
There need to be targets.
Numbers.
Conversations.
Indicative valuations.
And a realistic ability to execute.
Capital is far more willing to finance a pipeline than an ambition.
This is where the Italian market becomes particularly compelling.
Anyone who has worked in Italian hospitality for long enough will know several groups that already meet at least some of these criteria.
Experienced operators.
Strong regional concentration.
Good-quality products.
Acquisition opportunities within reach.
And, in many cases, no capital structure capable of converting those opportunities into a genuine consolidation strategy.
The real bottleneck is intermediation
This is probably the most important point.
On one side, there is international capital.
On the other, Italian hotel entrepreneurs.
What is too often missing in between is the ability to translate a hotel business into an institutionally investable proposition.
An investor considering a transaction worth tens of millions of euros is not looking for a list of hotels.
It needs to understand:
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the corporate perimeter;
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normalised EBITDA;
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the debt structure;
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the distinction between the property and operating components;
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the quality of management;
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required capex;
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the acquisition pipeline;
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entry multiples;
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prospective returns;
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key risks;
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potential exit routes.
The entrepreneur, meanwhile, needs to understand that there is a wide spectrum between two extremes:
remaining exactly as the business is today and selling the company outright.
Between those two options sit multiple possible structures.
Preferred equity.
Minority equity.
Private credit.
Hybrid instruments.
OpCo/PropCo structures.
Joint ventures.
Capital solutions.
But these structures only work if they are designed around the company’s industrial requirements rather than around whichever financial product somebody happens to be trying to deploy.
That is why the role of the advisor is not simply to “find a fund”.
The fund becomes relevant once the transaction itself is understandable, credible and investable.
The real work comes first.
Normalising the financials.
Understanding what the hotel group is actually worth.
Separating real estate value from operating value where appropriate.
Defining the corporate architecture.
Identifying and assessing acquisition targets.
Building the integration plan.
Preparing the entrepreneur to engage with investors whose metrics, decision-making processes and technical language are very different from those of day-to-day hotel operations.
This is the space in which Investhotel Capital Partners operates, within an ecosystem that combines transaction analysis through Investimenti Alberghieri, operating expertise through Hotel Management Group and professional insight through Roberto Necci.
The Marseille-based group did not become a 25-hotel platform because France necessarily has better hotels than Italy.
It became a platform because an entrepreneur who knew what to buy, an investor capable of financing the growth and a capital structure aligned with both parties’ interests came together.
That is the lesson the Italian market should be studying.
Capital is not the problem. The bridge is
International capital remains strongly interested in European hospitality.
In 2025, a major Canadian institutional investor acquired a stake in Three Hills itself and, in early 2026, the firm closed a vehicle of approximately €300 million focused specifically on the lower middle market.
That is precisely the segment in which a significant proportion of Italian hotel operators with consolidation ambitions sit.
The problem, therefore, cannot simply be reduced to:
“There is no capital available to grow Italian hotel businesses.”
The capital exists.
The acquisition opportunities exist.
The entrepreneurs exist.
What is often missing is the ability to structure a transaction that brings all three together.
The capital is there. The business is there. What is missing is the bridge.
And those who build that bridge before others do may be able to participate in a consolidation phase in Italian hospitality that has so far developed far more slowly than the underlying potential would suggest.
Once the first platforms demonstrate that the model works in Italy too, competition will inevitably increase.
And entry conditions are likely to change with it.
A confidential discussion about your capital structure
If you lead a hotel group and already have a tangible acquisition pipeline, or if you are considering how to finance growth through acquisitions without giving up control of the business, the first step is not to start looking indiscriminately for a fund.
The first step is to determine whether the opportunity can be structured in a way that institutional capital can invest in.
We can confidentially assess the group perimeter, financial structure, real estate and operating components, acquisition pipeline and the alternative forms of capital that may be available.
Direct contact: r.necci@robertonecci.it
Analysis by Roberto Necci, advisor on extraordinary transactions in the hospitality sector, with more than 150 completed transactions.
Further insights and platforms
Roberto Necci — hospitality advisory, analysis and industry guides
Investimenti Alberghieri — analysis of extraordinary transactions across the Italian and European hospitality markets
Investhotel Capital Partners — transactional advisory, M&A and capital structuring
Hotel Marketing Lab — hotel marketing, positioning and commercial development
Necci Hotels — hotel development and hospitality projects
Vertex Executive Search — executive search specialising in hospitality
Roberto Necci Academy — management and entrepreneurial education for the hotel industry
Hotel Management Group — hotel management, advisory and operational repositioning
