Deutsche Hospitality structure fuels three-brand growth
 
Deutsche Hospitality structure fuels three-brand growth
15 DECEMBER 2016 8:16 AM

Out of the embers of Steigenberger Hotels, the creation of Deutsche Hospitality will, according to its CEO, allow the strategic growth of its brands globally.

BERLIN—CEO Puneet Chhatwal said the decision to create Deutsche Hospitality as the umbrella for the German hotel firm’s three brands will allow for aggressive growth and lead to a far better guest understanding of those brands’ characters and offerings.

Deutsche Hospitality was formerly called Steigenberger Hotels Group, which caused a little confusion with its luxury brand Steigenberger Hotels & Resorts. Its two other brands are IntercityHotel and Jaz in the City.

Chhatwal said the decision was born during a discussion of the company’s logo, which had three red stars symbolizing IntercityHotel and two larger, gray stars for Steigenberger Hotels & Resorts. The concern was: Where and how could that logo incorporate Jaz in the City, or additional brands in the future?

That discussion soon turned to what the entire company represented. Thus the total rebrand.

“In the life cycle of brands and products, there comes a time when you have to push on. ... As (we went) through each of these blocks, what came to our minds was to create a new entity, a new umbrella, something very symbolic of what we are, where we come from and where we are going,” Chhatwal said, adding that he believes the company stands for the understated excellence of German hospitality, care, perfectionism and visions.

For a celebrated hotel firm that does not have footprints in either the United States or United Kingdom, it was important initially to project an image that resonated in the destinations where the company is seeking to cement itself, Chhatwal said. Further, the rebranding had to incorporate not only the hotel side, but also the other areas of hospitality in which the company is involved, he said.

That last piece of thinking resulted in the parent company adding the word “hospitality” to its title in place of “hotel group.”

“What does ‘Deutsche’ symbolize for the rest of the world, when we think of India, China, Middle East?” Chhatwal said. “It was a difficult decision, as ‘Deutsche’ is not (an) English world, but we feel it is an internationalized word, as are (for example) ‘kindergarten’ and ‘Brexit,’ and more recently even complex words such as ‘schadenfreude.’”

Recognition of the new name, he said, is just a matter of time.

Brand reboot
The parent company is differentiating itself, Chhatwal said, but so are its brands, which all contain their own distinct DNA.

The job on hand now is how those three brands each interpret and exhibit their German identities, Chhatwal said.

“What does it mean to be Deutsche?“ he said. “More German-speaking staff, for example, the presence of a German bakery, a lounge on the 19th floor with its German name for 19, ‘Neunzehn,’ and German-language newspapers. Small things can help you differentiate yourself.”

According to Chhatwal, Steigenberger Hotels & Resorts and Jaz in the City are the company‘s two truly global brands. IntercityHotel, meanwhile, needs “more dots on the map in one country because of the level of positioning needed in the midscale market and the importance of having brand awareness,” he said.

The word “Jaz,” Chhatwal said, will further aid internalization of the brand.

“That will resonate in any market,” he said, adding that the brand will target selective growth in vibrant international destinations.

Steigenberger has both business and resort properties, but Chhatwal said he felt the resort side got lost somewhere along the way.

“We want to aggressively get back to that. Historically, the company was known for resorts,” he said.

Commercial hubs, capitals in the Middle East and key markets in Asia are all on Steigenberger’s expansion map, according to Chhatwal, as the brand seeks to further move out of its European base.

“We’re looking at India and Beijing. ... We’re opening in Dubai, Doha, also in Cairo with an opening in the next two to four weeks,” he said.

A new development with a Steigenberger and Jaz hotel in the Cape Verde Islands also is indicative of the firm’s robust plans, he added.

“I came back from (the Cape Verde Islands on 12 December). We’re working with British firm The Resort Group,” he said. “It is a great opportunity, and I heard it only has three days of rain a year.”

On 15 December, Deutsche announced its expansion to Tunisia—its third African country. In the second quarter of 2017, the company will operate two hotels in the Mediterranean city of Sousse: the 365-room Steigenberger Hotel Kantaoui Bay and the 570-room Jaz Hotel Tour Khalef.

Backing up that brand and destination push are the education and innovation Chhatwal said Europe is a hotbed for.

“They have to be a driving force behind the industry,“ he said. “Ultimately, the hotel industry is about service, not just brands and distribution. In Germany, the apprenticeship system has created a lot of excellence across the board. Hotel schools and education are excellent, and undergraduate and vocational training has created a skill set that is a key differentiator for Europe. That is my belief. Being born and raised in India, I did not have the privilege to have this.”

Chhatwal said Deutsche Hospitality aims to grow from about 100 hotels in operation today to more than 120 by 2020. The plan is to grow the overall portfolio, including those under development, from 116—at the time the new branding was announced in October—to 150 hotels by 2020.

“We see no reason not to achieve 150-plus of total portfolio,” he said.

IntercityHotel opened its first property in China in November, four months after its first European hotel opened in Oman.

Traditionally, IntercityHotel properties have been in transport hubs. Chhatwal said every IntercityHotel product in Germany is by a train station—the name of one of Germany’s train services also is Intercity—apart from two located at airports.

Furthering its commitment to its home market, Deutsche Hospitality this week announced three new IntercityHotel properties in Germany—in Dortmund, Hamburg and Hildesheim. They all continue the rollout of that brand’s new interior design from Italian architect Matteo Thun.

Business models
As the company expands its reach globally, so does the business model overseeing that growth. It is not a matter of exporting Germany’s favored lease model, Chhatwal said.

“We’ve completely changed our portfolio,“ he said. “65% of our new contracts in the last three years are fee-based; the rest are leases. We still love IntercityHotel leases in Germany, as they earn us a lot of money.”

The decline in business and group travel is not causing Chhatwal sleepless nights.

“We take the long view. Soft demand always come back, but I do see supply as a problem,“ he said. “It is always about being in the right markets with the right brand and with the right timing. With the right mix, you are better hedged. If you are in too many countries, yes, that could be a challenge. And there always needs to be a little bit of luck when you enter a new market,”

He cited terrorism as an example of something than can rapidly hinder a destination.

“Cheap money is encouraging a lot of supply growth,” Chhatwal said. “What will happen in two or three years’ time, as it cannot stay at the same level?”

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