The fund, which is being managed by Michels & Taylor, will aim to find individual assets which could deliver ‘significant trading improvements’ in the short to medium term under better management.
Ideally, the assets will be valued at £10 to £20m and comprise of hotels with a minimum of 100 bedrooms. Small clusters of 2-3 hotels will be considered, but portfolio transactions will not.
The fund will primarily focus on the UK provinces, but ‘targeted acquisitions’ in Europe will also be considered.
Michels has secured funds for the new venture privately and will begin investing ‘as soon as the appropriate assets are identified’.
"I am extremely pleased to have secured the necessary funds for this new venture,” he said.
“The period of buying distressed assets in the UK hotel sector has gone for the time being and we are now in a period of driving value through better management.
“With Michels & Taylor now established as one of Europe's leading hotel management and consulting businesses, we have the team to deliver these improvements and generate value for our investors".
The new fund will sit entirely outside of Michels & Taylor, and be supported and treated as a client of the management company.
Michels & Taylor chief executive Hugh Taylor said: “This is wonderful news for our company, and the team are very excited to be supporting the new fund in this way.
“It will allow M&T to substantially grow its management contract business whilst maintaining the high level of focus and support we give, and will continue to give to our existing clients."