Deutsche Hospitality is picking up the pace of expansion, as it aligns its systems more closely with new Chinese parent Huazhu.
Huazhu is famous for its continuing rapid pace of growth in China, where it regularly signs hundreds of hotels a quarter. At DH, new budget brand Zleep is stepping up the pace. But as moves begin to integrate group systems, there are changes at the top of the Deutsche structure, with the departure of CEO Thomas Willms and CFO Matthias Heck, who is retiring.
Deutsche acquired a 51% stake in Zleep in 2019, and the brand is starting to see the benefits of having two development teams on the ground, one in Scandinavia with Haaber, and the other as part of the DH team, in Frankfurt. The company recently announced two new hotels in Hannover, Germany and in Denmark, for Zleep. In August, it signed a hotel in Glostrup, west of Copenhagen, its fourth site around the Danish capital. And in September, the new build in Hannover was signed, promising a 124 room hotel for opening at the end of 2022 that will be the brand’s third German location.
The additions follow a July signing of the first Zleep in Switzerland, due to open in Zurich in 2023 and the first franchised site for the brand. Currently, there are 12 Zleep locations open.
“Many of the deals we are seeing were started pre covid-19,” Zleep founder Peter Haaber told Hotel Analyst. “It’s full steam ahead for the development department.”
He said the brand is looking at a variety of formats to exploit expansion opportunities, depending on local market forces. “It’s a mixture. We’re doing a franchise deal in Switzerland – Zleep is a very franchiseable brand.” In Germany, as in Scandinavia, he said leasing is the preferred route to market: “You have to swim with the water.”
The company has also said goodbye to its CEO of the last three years, Thomas Willms, who finishes at the end of September. In an official statement, Willms said: “My task has now been completed – It’s now time for me to move on and seek new challenges.” CFO Matthias Heck will be holding the reins while a successor is selected.
The new CEO is Swiss-born Marcus Bernhardt, an external appointment who was previously at Europcar and at Gulf Air in Bahrain. Bernhardt began his career in hotels, working at Carlson Rezidor and spending the years between 2004 and 2010 as executive vice president of Steigenberger Hotels & Resorts.
Under Willms, Deutsche expanded by launching new, internally created brand MAXX and by acquiring Danish start-up Zleep in 2019. From 2018 to 2019, it grew revenues from EUR770m to EUR829m, as its portfolio grew from 105 to 120 hotels. Then, in late 2019, the board accepted a takeover offer from Chinese group Huazhu.
In the financial officer role, Ulrich Johannwille will take over from Heck, in the dual roles of CFO and director of human resources. Johannwille joins DH from German airline Condor, part of the Thomas Cook group, where he has worked since 2006.
HA Perspective [by Chris Bown]: With the Chinese at the helm, Deutsche probably feels a very different place to work, compared with a year ago. Huazhu continues to expand its Chinese portfolio at a frankly amazing pace, and will doubtless be asking its German division to step up. There’s a 500-day plan under way to integrate combined IT and operational systems, while H Rewards – the Huazhu loyalty plan – has been launched in the European market.
And so out go the old guard, and in come the returning Bernhardt, and newcomer Johannwille. The pair will doubtless inject a different style into what is now, effectively, the European arm of Huazhu. Their tasks will likely include planting DH brands into China, and working out how to exploit the Chinese connection to the benefit of European properties.
One challenge for incoming Chinese executives may be adjusting to Europe’s many different ways of doing things – despite the “single market” mantra. Expanding in massive single country markets such as the US and China is relatively straightforward. But Haaber cautioned that even taking the Zleep concept from Denmark into Sweden required adjustments, in order to adapt it to the country’s own, different ways of doing business.