Invesco Real Estate has launched its third pan-European hotel fund and for the first time has given it an open-ended structure.

The fund manager said it had raised close to €180m from 10 institutional investors in an initial round of fundraising.

Invesco launched dedicated European hotel funds in 2006 and 2011, structuring them as finite-life, closed-ended vehicles. Last year, it sought to wind up its second fund early when it found a buyer for a number of assets.

The switch to a perpetual-life fund for its third vehicle reflects a wider shift in favour of open-ended structures, as investors seek long-term exposure to real estate markets.

Earlier this year, Tristan Capital, which has always managed closed-ended funds, launched its first “long-life” fund.

Invesco said the open-ended structure would also suit hotel investments because of their longer leases, lower volatility and long-term income and return characteristics compared with traditional commercial property.

The fund will seek to generate an income return of between 6% and 7% by acquiring high quality, mid-market hotels in city centres that can cater to business travellers in the week and tourists at the weekends.

It has a €200m seed portfolio of four assets in the Netherlands and Germany, and aims to grow the fund to around €500m in the first two years.

Marc Socker, managing director of hotel fund management at Invesco Real Estate, said Invesco continued “to see growing interest in this sector, particularly from investors who find the long leases and strong cash flows generated by hotels very attractive”.

He said: “Investors also noticed the way hotels continued to provide a positive total return compared to commercial property during the financial crisis, and this gives them an additional degree of confidence today.

The fund will target an income return which provides a premium to the long-run average income return from pan-European commercial real estate.”

Internos Global Investors, another fund, also recently raised capital for a European hotel fund.