Editorial

Dear Insider,

What did you think of the atmosphere at Expo Real? We found no clear mood! Our editorial team – four women working flat out – can only draw conclusions today from the many conversations they had. The hospitality area in Hall A1 was very well attended on the two main days, Monday and Tuesday; everyone was keen to hear each other’s views. The hospitality industry did not complain; it was self-critical, honest and keen to foster greater cooperation both amongst itself and with its stakeholders.

Nevertheless, it sat there, terrified, like a rabbit caught in the headlights – "the Indians", PRISM. It's no wonder, given the rapid and harsh redundancies over the last few months. The culture clash intensified yet further when a Prism manager introduced himself to a German operator at the trade fair and, in his second sentence, asked, "Can we buy you?"

First there was the Revo shock earlier this year, and now the market is undergoing rapid change driven by new, international operators. Prism's founder and CEO, Ritesh Agarwal, sought to build trust during the conference panel and, due to time constraints, outlined only parts of the strategy. Seated next to him were the Dutch white-label operator Odyssey – which had recently undergone a thorough restructuring and was a "new entrant" to the market – as well as the two franchisors, Wyndham and Accor. Everyone wants solid business relationships.

Dear Insider,

At the Amsterdam Commercial Court yesterday, members of the Smura family were required to explain why Grand Metropolitan Hotels Holding B.V. had categorically refused to grant the lawyer – who, following a court ruling in July, had taken over the management of the holding company – any access whatsoever to documents or email correspondence. My colleague Sarah Douag was at the hearing.

Following our critical article on Kempinski last week, traffic to our website and LinkedIn impressions have soared to unprecedented record highs. A wide-ranging discussion is taking place on social media about mistakes, weaknesses and consequences. A new CFO was appointed on Wednesday – the second new appointment at corporate level within two weeks. The COO is still in office; is there a new CEO as well? It’s all very unclear.

Airbnb has recently set aside USD 250 million to help finance new apartments, on the most favourable loan terms. But the money isn’t a gift. The short-term landlord wants to be celebrated in public once again. Behind the scenes, it looks as though this is a thorn in the side of the European Commission, which wants to restrict short-term lettings.

Dear Insider,

Things are heating up again at Kempinski Hotels, but only internally, behind the scenes. All things are pointing to change after too many changes in recent months. Barbara Muckermann’s strategy does not seem to be working. The luxury hotel group has lost 19 hotels in two and a half years. On the one hand, the aim was to separate the unprofitable luxury hotels from the iconic properties, whilst at the same time transforming the company from an asset-light to an asset-heavy model. The group recruited a whole host of high-earning chief officers; 120 staff now manage 63 hotels and a meagre pipeline. To wind up the unprofitable hotels both operationally and formally, a new company (KISA II) was also quietly set up. But a KISA already exists. So why do there have to be two? 

There are still a great many unanswered questions. Kempinski Hotels is less transparent than the respected luxury hotel group has ever been. The true value of Europe’s oldest luxury hotel group lies on the floor. It is now up to the supervisory board members and the owner family from Bahrain to take the final decision. They must now decide on the future of Kempinski, not just on a CEO.

Dear Insider,

Just 16 days to go until Expo Real in Munich. It's difficult to gauge the mood on the ground; there'll certainly be plenty of discussion. A great deal can already be deduced from today's topics and market movements. Let's get straight into it: The growth of the "Collection" brands run by the major chains is not as strong as one might think – established independent hotels are holding their own (after all, which of them would want to pay expensive franchise fees?) and are entering into partnerships. Preferred Hotels is expanding by 40-50 hotels a year. The family-run business Ueberroth knows how to deal with hotel-owning families. Lead Developer Philippe Weghmann explains which tools, partners and programmes are used to turn independent hotels into long-standing members.

At a conference in the US, Booking.com’s chief financial officer described himself as the "best friend" of small hotels: Independent hotels and small groups account for a third of bookings, whilst chains account for just 10 percent, he says. The situation is different in Europe, as the latest HOTREC distribution figures show. The OTA giant remains super confident: AI won't keep Booking awake at night – because after visiting five platforms, consumers only book with one (of their) brands.

Dear Insider,

You can’t help but come across speeches and articles on the subject of Branded Residences these days. The trend, which first emerged in Miami, is now reaching its limits in Dubai, the epicentre of the boom. On the one hand because of the US-Iran conflict, and on the other because the Residence building is no longer adorned with the names of hotels, but with fashion brands and football clubs. Because customers are currently no longer keen to travel to the Middle East, sales managers are now flying out, for example to Amsterdam, to a huge shopping mall teeming with people, where holiday homes can be sold quickly (just like in the days of timesharing?). An era of "mass residences" is beginning.

Many impulse buyers pay little attention to the details of the property. And above all: They sign long-term contracts. But what happens if the hotel brand pulls out? Who will offer this service then? By how much will the brand value decrease for the owner, and by how much for the buyer/customer? In which phase of the cycle do which stakeholders actually make the big money? 

Jeff Tisdall of Accor One Living, Henk Meyknecht of the private equity firm SAH in Dubai, and Hans Peter Betz, a consultant specialising in advising property owners in the Middle East, begin by highlighting just how complex everything has become. Which is why they themselves are taking a highly critical look at the changes and the future of residence operators and brands, right here and right now. Sarah Douag has recorded everything in detail, including the stumbling blocks. A massive research project for you, dear subscribers!

Dear Insider,

Famous names such as Adlon Kempinski trigger a media storm, particularly when the planned sale of the hotel property falls through, as happened this week. Our finance and funds specialist, Beatrix Boutonnet, remains calm and continues to analyse this complex situation. Today, she is questioning the figures relating to the return on investment. And the timing of this plan, which remains rather odd. Meanwhile, Jagdfeld, the founder of the Adlon Fund, is already celebrating his second opportunity to sell.

Change of subject: Away with boring lobbies and empty workspaces! ATworld, a subsidiary of the investor Aroundtown, has turned a quiet mega-trend into a structured membership programme: At 2,500 locations (well-known hotels, hotel chains and airport lounges), traditional business travellers and digital nomads can find workspaces ranging from relaxed to professional, as well as other amenities, all bookable via the ATworld app, along with useful benefits for guests. This is more than just a matter of optimising floor space.

Dear Insider,

The holiday month of August brought little respite, neither on the motorways nor in our inboxes, and certainly not in the hotel sector. Hardly a week goes by without a bankruptcy, a scandal or some bizarre story. We immediately channelled our holiday energy into two major stories. Our (hotel) finance and investment fund specialist, Beatrix Boutonnet, takes an in-depth look at what would happen if the Adlon Kempinski were to be sold, either with or without the brand.

The bidding war over the naked real estate and the sexy brand has begun; neither the Jagdfeld family, as brand owners, nor the Fundus Fund, nor Kempinski are currently managing to sell the two together. I've also added a few provocative thoughts of my own to Beatrix's in-depth analysis. Yesterday, over 4,000 investors in the Fundus Fund voted for or against the sale of the property; the result will not be known for a few days. Whatever happens, we're sticking with it. This announcement that the property is up for sale set things in motion – and brings the matter to the public's attention.

Story 2 is really just a short story; the names 12.18., Lindner and the Berlin Dental Association’s Pension Fund (VZB) make it exciting once again. Investment Company 12.18 has filed for insolvency under self-administration on behalf of its parent company: Behind this are the associated companies. Susanne Stauss has raised the first important questions though. And her sense is that there's tension between 12.18 and the VZB.

Dear Insider,

This scorching summer has the potential to cause a major upheaval in the hotel industry. We are therefore kicking off today’s edition with a rather unusual call into the woods: "RevPAR is falling!" Dirk Iserlohe could only shake his head when he heard that hotels on the Baltic Sea were cutting their prices. Rates and RevPAR shouldn’t be going down – they should be going up!! By €20 to €30! The Executive Board of Honestis AG (Dorint Hotels) is speaking plainly, because it is intolerable that the price war is hindering quality and value creation.

The industry is facing massive change. The German hotel market is under pressure – partly due to the Revo Hospitality insolvency and the lack of transparency surrounding it. Owners are learning the name of their new operator from the press, whilst interested bidders are complaining about a chaotic data room and “communication bans” between the owners and the bidders. A confidential document shows us how insolvency lawyers can put pressure on landlords.

In general, we are seeing how individual operators in various countries are transforming themselves into European platforms (just as Ruslan Husry had planned). Operators bear the full operational and financial risk, whilst franchisors receive remuneration. The balance isn’t quite right anymore. Business models must be resilient.

Dear Insider,

Is it possible to think like an Indian and act like a German? In theory, yes, but the differences in culture and in how quality and profit are defined do tend to come to the fore – in the 'little' things of working life. Our first article today explores the structure of PRISM in a little more depth – to help us understand the size of this tech giant and what drives the hotel operator. What are 'storefronts'? This unusual method of counting (for Europeans) shows, amongst other things, just how small the hotel sector is in Europe compared with all other types of accommodation. So, they will acquire even more hotels in Germany than the 24 that PRISM confirmed this week. Yes, the contracts have been officially signed, according to the Indian PR manager. We checked the list of names to see if all the hotels were still available for booking.

PRISM's managers are open and answer questions in a friendly and polite manner. However, due to the IPO application, much of the information provided to the press is severely restricted, so we have turned to our own extensive network. We noticed a great deal of nervousness and some odd behaviour during the first 'blind transfers of undertakings'.

Suddenly, an auditor from India turns up unannounced in the lobby; ad hoc requests for system access are made; the hotel staff are frustrated; and those who have spontaneously been handed their notice are still trembling. And just as it was back when US chains first ventured into Europe, it is now the Indians who are struggling with German law, for example with German works councils and the GDPR. Our sources point to weaknesses in operational implementation – more than we are describing today. That’s why most people call it chaos, speaking confidentially.

Dear Insider,

Latest from the court: In proceedings in Amsterdam, the Pension Fund of the Berlin Dental Association (VZB) had applied for an investigation into the business practices and management of Grand Metropolitan Hotels Holding B.V. (GMH), for the suspension of the chairman and for the appointment of an independent person (a lawyer) to the board. The court granted this request yesterday. Both companies are linked through a joint venture.

GMH Holding B.V. announced the "split" yesterday in a press release of its own. The general consensus was that an agreement with the VZB was clearly no longer possible. Smura points out that B.V. is an investment holding company within the existing structure and should not be equated with the GMH Group.

And we're staying in Amsterdam for a while longer. This time, Dutch hoteliers have taken the city to court – because it is set to raise taxes relentlessly and consistently until 2031. The first step was to increase VAT from 9% to 21% on 1 January this year. Then there's the tourist tax on top of that. Already, instead of paying €100 for the room, they're paying €133.50, and by 2031 it will be €141. Crazy. The first impact is already apparent.