Meininger float on pause

(Meininger Brussels City )

Reports suggest that Meininger’s planned £330m initial public offering in London has been postponed due to the global outbreak of the COVID-19 coronavirus.

Meininger Hotels said that its strategy after floating was to triple the number of its beds in five years, mostly outside Germany.

It is thought that the float, if successful, would value the business at €400m, after it failed to sell last year.

The report, in The Sunday Telegraph, did not cite a source for the information, which appeared in a wide-ranging report about a decline in Chinese exports and the effect of the coronavirus outbreak on the hotels sector.

Meininger has not yet formally announced the listing plans, the report said.  Roadshows for prospective investors have been put back pending further developments in the coronavirus outbreak, according to the newspaper. Meininger did not make a formal comment to this publication.

Meininger is an international hybrid hotel operator, that provides a low-cost, attractive and modern accommodation service throughout Europe. It markets its product on both a per room and per bed basis, aiming to appeal to a wide clientele, from school groups and families to backpackers, city tourists and business travellers.  The group does not own its hotels’ freeholds, instead deploying a capital light roll-out strategy, where landlords contribute to the upfront capital commitment of converting a site into a Meininger in return for a long lease backed by a strong rent cover.

Founded in Germany in 1999, its first hotel was on Meininger Street in Berlin. Today it has 30 hotels with a 4,700 rooms and 16,600 beds.  As well as Germany, it has a presence in Austria, Italy, the Netherlands, Belgium and Denmark plus one in London.  The group’s bed occupancy rate is c.74% (Industry standard is <50%) and its room occupancy is c.90% (industry standard is 77%).

Meininger’s latest results for the year to 31 March 2019 saw it report revenues of £98.1m and Ebitda of £16.5m. Meininger, under its CEO Hannes Spanring, has more than doubled the room count since 2016 and its strategy, after floating, is to triple the number of beds in five years, mostly outside Germany and this requires no more capital to achieve this.

Last year saw Meininger sign on its first hotel in Israel, a 210-room, 800-bed site in Tel Aviv, due to open in 2024. Spanring said: “We are the first internationally operating hospitality company to bring the hybrid hotel concept to the Middle East. Although the city's supply has grown immensely over the last 10 years, accommodation in the hostel, economy and budget segments is severely under-represented.”

 

Insight: With the price of oil in freefall and borrowing getting lower by the minute, now should be a glorious time to be working in the global hospitality business, but that is very far from the reality of a situation where the advice is to stay clear of other people.

At Meininger, as at Airbnb, the thinking would appear to be to stay away from the easily-spooked markets until such a time as they’re not jumping at every shadow. Hard to call when bad weather and bad cricket results can cause a drop.

Should Meininger have continued to pursue a sale? Any buyer now would also be looking for a bargain, as we hear from the brokers that the vultures are starting to circle. The good news for Meininger - and for Airbnb - is that those still travelling will be looking for bargains.