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Home > Investments > Fixed Income

By Holly Black | Published Apr 29, 2012

Boutique hotel guide launches retail bond

Online hotel guide and travel club Mr & Mrs Smith is set to launch its first retail bond.

The four year Smith bond will pay a fixed rate of 7.5% twice yearly with an option for bondholders to receive their interest in so-called loyalty money, which can be used toward bookings at any of the 900-plus boutique hotels and houses listed by the site. Opting for this choice will also boost the investor’s return by a full 2%, giving an annual rate of interest of 9.5%.

This is not the only retail bond to capitalise on its loyal customer base. The so-called chocolate bond issued by high street brand Hotel Chocolat paid its interest to investors in chocolate form.

Mr & Mrs Smith launched 10 years ago as a niche guidebook publisher, later evolving into a booking service, hotel guide and travel club.

Looking to generate £5m from the issue, chief executive and co-founder James Lohan said he is looking to develop a family of sister brands to reach a wider audience.

Currently focused primarily on the more discerning traveller, these new variants would target families, groups and business trips.

With a business that has been growing year on year and building a strong brand identity for the past decade now may seem a curious time to explore this way of raising capital. Lohan said the decision was made to try and help to build the company’s global profile.

“The brand is mature enough now, we are known in the UK and Europe, but to really build a global platform that needs a bit more money,” he said.

With interest rates still at record lows it is unsurprising that ventures such as this appear increasingly appealing to the investor, although it is important to consider that these retails bonds are unsecured as they are not listed. But with any investment comes an element of risk.

Applications can be submitted from Sunday 29th April until Wednesday 27th June via the website www.mrandmrssmith.com/smithbonds with a minimum investment of £1,000 and no upper limit.

holly.black@hotmail.com

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