Challenger bank Oaknorth loans a further £7.3m to Z Hotels for new London sites in Covent Garden, Holborn and Tottenham Court Road

Challenger bank and fintech unicorn Oaknorth has provided £7.3m in a debt financing deal to compact luxury hotel brand Z Hotels, City A.M. can reveal.

The hotelier says it has undergone rapid growth since launching in 2011, which now owns and operates eight hotels at sites across London, Glasgow and Liverpool.

Today’s news is destined to finance the 120-bedroom Z Tottenham Court Road hotel on Poland Street in Soho. It adds to Z Hotels’ existing £15.2m facility from Oaknorth, which the bank provided to fund the development of new sites in Covent Garden and Holborn.

“On any given day, London’s hotels now experience 80 percent occupancy rates, and we’re in the very fortunate position to have even higher figures than this across all of our sites,” said Z Hotels director Jonathan Raymond.

“We were delighted to once again be working with Oaknorth to take our growth plans forward.”

Oaknorth itself has been in operation since 2015, becoming one of the first challenger banks to reach profitability in just 11 months post-launch.

Read more: Challenger bank OakNorth hits unicorn status as it grabs £154m

The UK bank now has a loan book of over £1.2bn, which it says has created 5,100 new homes and 4,000 new jobs.

Deepesh Thakrar, senior director of debt finance at Oaknorth, commented: “Since our launch in September 2015, we have worked on a number of deals in the hotel sector – from mergers and acquisitions, to buy-outs and development.

“Z Hotels has a proven track record, an excellent business model, and a management team with over four decades’ experience. Their unique concept has already proven to be extremely successful, enabling them to achieve much higher occupancy rates and margins than their peers. It is a high-growth and ambitious business that we are keen to support with further expansion.”