It is one of the sectors that has been hit hardest by the coronavirus pandemic, but Tristan Capital Partners still has faith in hotels.

The company has made its first investment for a new €500M (£422M) strategy to buy European hotels for its funds.

It has bought a 261-key, four-star hotel in Deansgate, Manchester, for an undisclosed sum. The asset opened in May following a three-year conversion from an office building. It has a gym, which is occupied by Trib3, and a food and beverage offering.

The hotel has been bought for the EPISO 5 opportunity fund. As part of the fund’s business plan, the hotel will be rebranded to YOTEL, a brand with 18 hotels in operation across Europe, Asia and North America and significant global expansion plans. The hotel will be operated by Hamilton Hotel Partners.

“Funds advised by Tristan have been actively pursuing hospitality opportunities with an emphasis on the UK and Spain and we are focused on acquiring assets which we believe will fit into either our core-plus or opportunistic funds,” Tristan Executive Director of Investments Kristian Smyth said in a press release. “Our objective is to invest in excess of €500M over the next 12 months and we are currently in discussions regarding a number of transactions in this space.”

Opportunity fund investors including Blackstone and Starwood have made significant investments in the hotel sector during the pandemic, betting that leisure travel in particular will make a strong comeback in the coming years, and that hotels that have been experiencing low occupancy for the past 18 months can be bought at a discount to their long-term value.