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Taking Stock of Hotel Investment & Development in German-Speaking Markets more than €40 million to the German Patrizia group. Four of these five trans- ferred B&B hotels still have to be built, which shows the market’s ravenous appetite and urge for investment. B&B Hotels is currently stepping up its opening pace significantly of one hotel per month under its new and fourth owner, the European private equity company PAI Partners. The group does not own any property in Germany at the moment, but three hotels are under development (Stuttgart Airport, Rosenheim, Neu-Ulm); one of them will be sold again soon. The longstanding skepticism concern- ing “cheap” hotels is definitely over now. “In the meantime, everybody knows that an investment of €10 million euros, for example, in one of our hotels will still be worth something after a contractual period of 20 years,” Luscher said. “The first B&B Hotels in Germany are already nearly 15 years old. They can still be renovated easily and professionally,” he said, praising B&B’s advantages in comparison to full-service hotels, where a re-vital- izing after such a period of time can pose considerable risks, mostly due to technical components or increased fire protection requirements, which can deeply interfere with the structure of a three or four-star hotel. From the perspective of investors, budget products are easy to handle: they are highly standardized, usually offer good quality, do not cause any great analysis efforts, and have the same asset management structures as higher-quality hotel segments. BUDGET-MINDED BRANDS Other international brands opened their first properties in Germany in 2016. Moxy, the lifestyle, budget product of InterIkea and Marriott, entered the market with three hotels: Munich Airport, Frankfurt-Es- chborn and Berlin-Ostbahnhof. Two more Moxy hotels will follow this year at Frankfurt Airport (Gateway Gardens) and at Stuttgart Airport/ Messe (in March and September 2017). Vastint Hospitality is the owner of all properties, with the exception of Stuttgart (GBI AG). In addition, the first two openings of Wyndham’s long-announced brand Super 8 took place last year (both properties are in Munich), which were able to position themselves very well in the market from the beginning. This year the next Super 8 will follow in Freiburg, in 2018 openings are scheduled for Dresden and Hamburg. Moreover, another young budget group was able to embed itself in the minds of the institutional inves- tors last year. Namely, Ruby Hotels, with its concept of “lean luxury.” On February 13, 2017, CEO Michael Struck opened the brand’s third hotel in Munich. In the meantime, renowned institutional investors are interested in the non-standardized lifestyle concept: Patrizia, Art-Invest, Allianz, and CBRE Global Investors have already signed. Large investors like the modular architectural system designed by Ruby, which uses every floor plan efficiently. Shower, bed or toilet modules can be grouped in various ways, but still allow for a high degree of series production. Upon agreement, Ruby also takes over the planning and realization. Accordingly, the pipeline is full. In the middle of 2018, eight Ruby hotels will be opened: After Munich, three more hotels will follow this year in Vienna (end of March), Duesseldorf (in summer), and Hamburg (in winter); hotels number seven and eight will follow in spring/summer 2018. Insiders have been observing the slow but continuous rise of these budget hotel brands, which all focus on Munich. First of all, there is the Cocoon hotel group, which has three hotels in top locations, all around the central station, with high occu- pancy rates and room yields. Their secret: every hotel realizes a theme consistently and stylishly. From the beginning, the “alpine chalet” concept was a complete success at the only six-month old Cocoon Hauptbahnhof (main station), follow- ing the motto “cosy alpine hut look in wooden style combined with funky retro design.” In fall 2016, Cocoon’s founder, Johannes Eckelmann, dared to try out something completely new: Buddy Hotels, with rooms starting at 10 square meters at an absolute premium location, in Munich’s Son- nenstrasse, only 200 meters away from the Koenigshof luxury hotel. This super-budget format does not offer any breakfast, but has a coffee machine in every room as well as a coffee machine in the lobby. 6 The budget brand LetoMotel also forgoes breakfast, but the guests will find a bakery right next door to the hotel. This is the group’s concept, which is backed up by a family office. Currently, there are three hotels, which are always located close to suburban train or underground sta- tions; in 2017, a LetoMotel will open in Nuremberg. HOSPITALITY INSIDE | IHIFPDF Image | Burgenstock Taking Stock of Hotel Investment
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