Getting into Germany’s hospitality market has become increasingly competitive, and those eager to stick their pin deeper in its map are now looking to convert and repurpose offices or reposition existing hotels.
Global operators apparently are in a hurry to make their mark, with both Marriott International and IHG announcing plans for Germany in recent weeks.
At Marriott International, the company plans to expand its Moxy Hotels brand into 40 new destinations across Europe in the next three years, with Germany a key target.
“Moxy is experiencing tremendous growth momentum driven by owners looking to maximize the value of their assets quickly with adaptive, re-use and conversion opportunities,” said Marriott International European Chief Development Officer Carlton Ervin, noting the brand’s “flexible” design adapts easily for a wide range of spaces, including a spice warehouse, historical office building or vodka factory.
IHG also announced plans to bring its Kimpton Hotels & Restaurants brand to Germany in 2023 with the opening of the 155-room Kimpton Frankfurt.
“Being one of Europe’s largest financial hubs, Frankfurt is a key location for us and this signing is a great milestone in Kimpton’s European expansion,” said Kenneth Macpherson, CEO, Europe, Middle East, Asia and Africa at IHG.
Cycas Hospitality, which specializes in extended-stay and dual-brand sites, reportedly sees potential to more than double its existing portfolio over the next four years, adding between 3,500 and 4,000 rooms by 2022 via new-builds, converting and repurposing offices or repositioning existing hotels.
The company said Germany’s stable economy and its polycentric city structure offered a huge opportunity for Cycas to contribute to the increasing diversification of the hospitality landscape, offering the increasingly mobile workforce a more suitable infrastructure when working remotely than traditional hotels can provide.
“The primary cities are becoming more and more difficult to find space and more and more we are looking to conversions and repurposing,” said Asli Kutlucan, partner-development and acquisition, Cycas Hospitality. “Where we can, we are looking for new builds, but we look at all perspectives. We do leases, we can do a joint venture where we can do forward-funding and forward purchases. Land and construction costs are at a premium, so if you contribute then you can share the costs.
“Germany has a very strong play with its developers and operators and you first have to establish yourself. We now have a very strong pipeline that we are negotiating and we should be able to close one or two deals by the end of the year. What we are proposing is being the largest branded, extended-stay operator and a company which experiments with dual-branded sites where possible; it offers more options.”
Despite the interest shown in the cheapest end of the market, Cycas is not being tempted by the economy brands. “If you want to go super-budget and stack up 200, 300 rooms, you can make it add up, but given that the purchasing power in Germany is strong, if I can look after 100 [fewer] rooms with a midscale brand, rather than create a bed factory, and get a good rate, I would,” said Kutlucan, adding Cycas is seeking a variety of brands. “We work with Marriott International, InterContinental Hotels Group, Hyatt. We look at extended stay and we look at the complementary brand, what would be a good secondary brand. Depending on the location, if you had a triple A location in a prime city you might not need a brand, but for someone who has never operated in Germany, a brand makes sense.”
Good news for the global operators looking at the buoyant German market, as long as they can be flexible.
Katherine Doggrell is an editor at Hotel Analyst, the U.K.-based news analysis service for hotel investors.