Editorial

Dear Insider, 

The Swiss countryside is as colourful as the Swiss hotel schools. The majority of them are owned by profit-making companies. There were also M&A deals in this segment. The number of students from Asia and Russia is falling; this is partly due to the strong Swiss franc and the relaxation of banking secrecy. Some hotel schools have also done themselves a disservice, for example through overly ambitious construction projects. Our author, Prof. Macy Marvel – who lectured at the EHL for 18 years – describes the changes and the current pressures facing these world-renowned educational institutions.

Charlie MacGregor, the founder of The Social Hub, loves disruption. He’s been thinking out loud where the revenue figures will be and what social communities and with what values will continue after his death. As well as two of his 21 "hubs" (hotels), he has also built a "Social Park" next to them in Rome and Florence. He sees a new "purpose" that brings locals and visitors together. The Social Hub in Rome is worth €13.8 million. How does it all fit together? Sarah Douag listened intently to this socially minded maverick. 

Max Schlereth too once went his own way; he set up Derag Serviced Apartments in Germany. These have long been known as Living Hotels – and now this courageous entrepreneur is converting a historic building from the Nazi era in Hamburg into a luxury boutique hotel. In addition, a new upscale brand for living has been announced. 

Dear Insider,

Please cool off – in the hotel! Seven hotels in the lovely little town of Mainz (near Frankfurt) are offering a cool double room during the hot weather, for just €55. It must be at least 33 degrees, and the weatherman must have forecast the heat five days in advance.

The German hotel industry has been smouldering since January this year. Behind the scenes, the sell-off continues as part of the Revo insolvency proceedings. The leading insolvency solicitors have everything under control – or so they believe. Four weeks ago, they announced five groups of bidders, but they still haven't revealed their names. The only thing that helps is media research. Thanks to the Federal Cartel Office, Motel One has now been ‘officially’ identified as intending to take over 10 properties. An interview in Israel reveals a new player entering the fray: the developer and investor Israel Canada plans to enter the German hotel market through its company “Brown Hotels” – via five operating agreements and one property (four of which are H Hotels from the Revo estate), according to the newsletter tageskarte.

Dear Insider,

Bold aspirations, shattered dreams, green buildings, a windfall, the courts, AI and mega-projects are the focus of today's edition. Marriott's management in Bethesda is unhappy that 51 Marriott owners, who own nearly 1,000 hotels, want a larger share of Bonvoy’s revenue and are also demanding transparency. Sarah Douag has taken a look behind the scenes.

Saudi Arabia has lost face. The colossal NEOM project is scaling back, and with it, its financial clout. There is a shortfall of $16 billion needed to terminate the contracts that are still in force. The damage this project has caused to nature, the environment and people is incalculable. Sarah – who was in the mood for writing this week – was on the hunt for figures.

The architects at the renowned Japanese firm Kengo Kuma & Associates quarried the material for the façades of the new Silk Towers from a tuff quarry – right on their doorstep in Batumi, Georgia. Local resources, wood and precise wind measurements, for example, point the way to the future of urban life. This is about the harmony between nature, living and social. Susanne Stauss reports: The presentation and discussion were part of our HITT Think Tank in Brussels.

Dear Insider,

There was no new news from Revo Hospitality this week; it appears that the contracts with the five identified operator groups have not yet (all) been signed.

There are other topics though, positive ones too: For example, independent hotels that are weathering the crises successfully thanks to their KPIs, cost management, investment strategy and staff. Karin Leeb and Martin Klein, the third generation to run the Wellnesshotel Hochschober in Carinthia, are disruptors and innovators in their own right. Since taking over the business 12 years ago, they have invested €41 million. This 116-room hotel is one of Austria’s pioneers in wellness: it boasts a perfect lakeside location, complete with a lido, a pool and sauna area, and a Chinese tower as an exotic landmark; it is a trailblazer in vegetarian-vegan cuisine, and employs 130 staff from 22 countries. Plus over 100 free (!) services and activities included exclusively for their guests. From yoga to herb walks and cold baths to dance classes… No, it's not a commercial "All-in" package; quite the opposite: This hotel is a cut above the rest and thinks differently. It is outgrowing its values. And the calculations are precise. And with success.

Dear Insider,

Since the recent headlines about Revo and the break-up of the company this week, we have been contacted by owners who do not trust the insolvency proceedings. If any other owners or (potential) operators have anything to share on this matter – in confidence, of course – then you know where to find me. Everyone is now waiting to find out the names of the five groups that wish to operate the 120 hotels in future. In the meantime, we are continuing our research.

To change things up a little, today we're bringing you entertainment from Mews, home of the mavericks. At its annual "Unfold" event in Amsterdam, the software company first brought a quirky solo guitarist onto the stage, followed by a cartoonist who coaxed "the child" out of the 700-strong audience and sketched their emotions and dreams. This paved the way for the great 'magic' of the hotel industry, which still embodies the unconventional, but no longer lives it. The receptionist is the one who shapes that first impression; it's just that they've been trained out of being creative. It's just wonderful to see how man and machine come together here. Mews is redefining "AI" (Artificial Intelligence) – as "Authentic Interaction" (AI). Sarah Douag was delighted.

Dear Insider,

Airbnb is on the rise again. Indian tourists, for example, booked 50% more overnight stays in the first quarter of this year than in the same period last year. Given such sharp fluctuations in the markets, another piece of news would almost have gone unnoticed: The key performance indicators for hotels on Airbnb are growing at twice the rate of the overall business. That means: Hotel bookings are making up for the decline in short-term rentals. It is not yet clear exactly what the hotel strategy will look like. But this: Airbnb has a technical infrastructure that helps to integrate hotels on a large scale at low cost and keep booking fees down. Sarah Douag on the quiet overhaul of the Airbnb platform and the power of its data. 

The Raiffeisen Association of Salzburg (RVS) is also quietly making its way through the region. It provides funding for almost 70 percent of tourism businesses and tourism infrastructure, such as cable cars. Tourism makes a significant contribution to the gross regional product and is responsible for 40,000 full-time jobs. Great: at last, a main bank for SMEs! Yes and no: The bank acts as a hotelier itself and can compare its own figures with those of the independent hotels applying for credit. No wonder the RVS continues to encourage hoteliers to invest in its own "forum". And two success stories are presented: that of the Brandlhof in Austria and that of Europapark in Rust.

Dear Insider,

Things are really heating up in the industry at the moment. Sircle Group and Revo Hospitality are finding themselves increasingly mired in negative headlines, and their misconduct is no longer an isolated incident. No, their behaviour is becoming the norm – and not just in Germany, but across Europe and internationally. Property owners and landlords are facing empty coffers. The only recourse left is the courts, which Deka Immobilien and Pandox are now also turning to. Everyone wants their rent arrears, in some cases amounting to millions.

As my colleague Sarah Douag has noted, the Sircle case – involving over € 30 million in lost rent – is the largest to date, the longest-running and the most structurally complex. Revo's debts are not yet known.

Gradually, a picture is emerging of a chain that begins with a complex web of holding companies, through which subsidiaries apparently pass on fees and other revenue through so many layers that, by the time it reaches the owner at the end of the chain, no money remains. Insiders are familiar with such "intercompany structures", which are often set up for the purpose of money laundering. Landlords will therefore be under greater pressure than ever before to monitor the tenant and their behaviour. Furthermore, the so-called 'good old' sale-and-leaseback process needs to be redefined; at present, when misapplied, it is one of the root causes of the problem. Dive right into this fascinating article.

Dear Insider,

The EU was at HITT – represented by two experts seeking to forge links with the tourism, hospitality and AI sectors. They didn’t make political PR speeches; instead, they spoke plainly. Nevertheless, some participants levelled very sharp criticism at Dr Misa Labarile and Mihaela Lafont. Conversely, the representatives of the European Commission acknowledged the EU's mistakes and gave a sober assessment of what is actually feasible within this system. Both urged the sector once again to speak out – only then would it be heard.

Misa spoke about the EU tourism strategy, which has been in the pipeline for 25 years and is finally due to be published by the end of July as a frame work. The bitter realisation: Tourism and hospitality have so far NOT featured at all on the Commission's agenda as strategically important sectors! Excuse me? How is that possible after 25 years of lobbying by European hotel associations?

A new door is currently swinging wide open for the industry: the topic of AI. To begin with though, the IT and AI specialists among the HITT participants engaged in a heated debate with Mihaela about the EU’s lack of competitiveness. However, Mihaela from the EU AI Office also highlighted new avenues for greater cooperation: Among other things, a Tourism Data Space is currently in the pipeline, and the AI Office is inviting the industry to help shape the next steps.

Dear Insider,

Today, I’m making a case for conservatism. At a time when statistics for the German hotel industry show that it has the highest number of insolvencies in the economy, it was refreshing to speak to Yoram Biton of Leonardo Hotels. "Making a profit these days isn't easy at all," he notes soberly. "It's hard work." That’s why Leonardo is growing only gradually; franchising costs too much money and only the rent cover counts. This operator’s business model is ‘stay grounded and disciplined’. Yoram reviews the P&L with each area manager every month.

Some investors lack one of these qualities. This week, Deka Immobilien announced the new operator for the W Amsterdam: Corendon. The company is based in Turkey, has a background in tourism, and is now running its first luxury lifestyle hotel. But without the restaurants. Liran Wizmann will be allowed to continue running these. It’s all set out in the contract, but of course it’s confidential. So the former operator, who owes Deka Immobilien €23 million in rent, will remain a business partner? In any case, a lack of transparency in communication raises even more questions. My eight questions (inter alia, how Deka Immobilien will guarantee its investors that it will regularly receive rent) was dismissed with four sentences. Don't investors have any questions at all?

Dear Insider,

Dubai has come to a standstill. The hum of business, the underlying sound of this glittering city, has faded away.  The Dubai Mall, the motorways, hotels and swimming pools – there are vast stretches that are completely deserted. Sarah Douag has brought lots of photos with her: She was there last week. She met with Henk Meyknecht, CEO of the private equity firm SAH, Duncan O'Rourke, Accor’s CEO for MEA & APAC, Joachim Hafner, General Manager of the Mandarin Oriental Downtown, and consultant Hans Peter Betz, and reports on the industry’s severe downturn, the cash flow of hotels, the decline in property values and how staff are being managed.