Despite the catastrophic conditions being faced by hotels and restaurants in Germany, as elsewhere, companies with deeper pockets are looking down the line at opportunities for their own expansion. Two such hotel groups are budget chains B&B and Whitbread’s Premier Inns.
The UK-listed Whitbread, which just recently posted a Stg725m pounds pre-tax loss in its interim results, is going ahead and buying 15 more hotels in Germany. This will boost its German portfolio of both open and pipeline hotels to 68 hotels with 12,000 beds. The hotels which it’s now buying currently operate under the Centro, Ninetynine and Fourside brands, with eight already open while seven are described as “pipeline” properties.
These will be rebranded as Premier Inn hotels, bringing its German portfolio of Premier Inn hotels to 29. Premier Inn has a 1% market share in the more fragment German hotel market, compared to its 11% share of the UK market.
In the UK, Whitbread made a €1bn rights issue in June, and was able to access €600m under the UK government’s COVID Corporate Financing Facility.
The budget sector in German makes up only 9%, in contrast with the UK where it is 28%. This is because of the difficulty franchise operators have in expanding in Germany. Hence the advantage of a big group like Whitbread with deep pockets. Whitbread is investing between €40m and €50m in the new hotels, on top of its already €800m commitment in Germany, but as we reported recently in REFIRE, it plans to take advantage of the sector difficulties to boost its own holdings.
The company said in a statement, “Given the scale and characteristics of this market and despite the significant impact Covid-19 has had on the sector we remain focused on continuing our expansion in Germany and delivering on our ambition to be the number one budge hotel operator in that market.”
Meanwhile, French budget chain operator B&B Hotels is planning to open 150 new hotels in Germany over the next ten years. It has already opened nine new locations since the start of this year, with four more to follow by then end of the year, including one in Austria.
Next year it will open eleven new hotels in Germany and four more in Austria, while further acquisitions are planned – again, depending on what is on offer, and what the COVID-influenced market might throw up. It is specifically looking for locations which enjoy at least 100,000 overnight stays per year.
Max Luscher, CEO for Central and Northern Europe at B&B Hotels, said: "We can look back on a certain recovery period over the summer. This gives us confidence, and we remain positive for the future despite the current increase in travel restrictions."
However, the loss of the trade show and event business and the general absence of international guests has kept important target groups away. "Anyone who has interesting plots of land or rental properties to offer should feel free to contact us. In the meantime, locations in the leisure sector are also increasingly of interest to us," said Luscher.
B&B is a subsidiary of the hotel chain Financière B&B Hôtels, which has more than 500 hotels in twelve countries. The well-financed group – its majority shareholder is Goldman Sachs - is focusing on growth: 300 hotels in Germany and 3,000 hotels worldwide are planned by 2030.
Separately, the Cologne-based Art-Invest Real Estate has managed to place its €200m hotel real estate fund with institutional investors. The fund is targeting post-Corona hotel opportunities where replacing the operator and taking over the operating management itself would be either likely or necessary.
According to Peter Ebertz, CEO and head of hotels at Art-Invest, “We’re convinced that the hotel sector will recover over the next three to five years. But in the light of current market conditions, the market needs a new investment strategy that can also allow for investing in operator-free hotels". He said he was very happy to have won further investors for the hotel segment in such uncertain times.
Ebertz is expecting that attractive investment opportunities will arise in the short term due to the difficulties in the hotel market, in which the operative hotel management in particular will have to be reorganized. "With our operating company GHotel, we can ensure the takeover of operations and manage the improvement of the operational performance in the hotels," he said.
