Marvin Rust, managing director at business advisory Alvarez & Marsal, opened the European Hospitality Investment Conference by stating that the general working scenario of the European real estate industry is “what can you do with a box that will not be an office?”
A lot of "outside-the-box" thinking by hoteliers in recent years has focused on delivering unique and memorable experiences to guests, but brand executives based in Europe said at the conference that innovation must take many forms.
Billy Skelli-Cohen, CEO of Zien Group, formerly Edyn Hotels, said his company's transformation has been aimed at providing multiple platforms and opportunities for hotel owners, developers and guests. One of those opportunities is a brand called Edyn, a nod to the company's former moniker.
“We have 14 hotels and two strategies, the repositioning of Edyn and a new concept inspired by the best of the guest house, an inspirational home, with the amenities of a hotel,” he said.
Charlie MacGregor, CEO and founder of The Social Hub, formerly known as The Student Hotel, said he continues his firm’s goal of bringing people together. He now has 23 hotels in eight European countries.
“We develop, own and manage our hotels, and we do our own sourcing to create more of a permanency, and then we add co-working and initiatives to center our hotels at the heart of the community. We’re moving away from age-based labels,” he said.
Fredrik Korallus, CEO of 92 Dean Street and a former CEO at Generator Freehand Hotels, might be developing the most non-traditional niche of the panelists. With his first hotel to open in 2025, he is providing what he called “nano” hospitality.
“It is just below 'micro' hospitality. We are looking to the Japanese model and initially will have two sites in London with some 3,000 pods,” he said. “The second piece of what we do is technology, and that is a massive challenge for all of us now, a straitjacket we live in, the legacy and [property management] systems. We will be like EasyJet, where guests book, pay and check in online.”
Korallus said guests will receive not a key card, but a “boarding pass” followed by a QR code.
“This has been a challenge. If you book a room for two, both guests will have their own QR code, which powers up your pod that in turns helps with ESG. On the day of departure, the QR code finishes, and the pod opens, at which point it is temporarily unusable. Yes, some might try and cheat the system, but we will work that out when it comes,” he said.
Laurence Geller, chairman of Geller Capital Partners, said his latest innovation merges the opulence and performance metrics of hotels with the elderly care-home community. Geller Capital Partners has invested in multiple hotel and hospitality businesses over the previous decades.
While working on United Kingdom government panels on dementia, he saw that the same systems that now are the everyday stuff of the hotel industry also applied to this other sector.
“I thought I can provide hospitality-driven care, but it can only work in luxury care, not that I wanted to only do this in that segment. I saw that investors were not interested due to the regulation, so I thought I would do myself,” Geller said. “That is all on one side. The other side is that it is very profitable, more so than any hotel. Well, there might be one hotel right next to Waterloo Station that could beat it.”
Margin Mania
Behind every concept is a strategy to increase profit margins — a critical play in an era of high procurement costs — as well as the addition of technology, which panelists said still has room for optimization.
Korallus said his brand’s bars will adopt facial-recognition technology to allow guests to pour alcoholic and other drinks.”
“My ambition is to create the highest [net operating income] in the industry. … The volume game for hostels is phenomenal. Guests’ purchases might be small, a burger, a towel, but they build up. We are super-bullish on London. We’ve not proven anything yet as we have not opened, but with 3,000 rooms I calculate more value than Generator would create with 14 assets,” he said.
Skelli-Cohen said a fallacy of innovation is the belief that genius can be duplicated.
“Innovation is a challenge. Experience and passion also can help create value creation. We’ve opened in Amsterdam and have driven the return we wanted. It is a very small data point, but we see [gross operating profit] levels being driven,” he said.
MacGregor said his brand would be able to drive higher margins if it did not offer food and beverage, co-working and other “people-oriented” offerings.
“We have had to raise service levels. Margins are not my main driver,” he added.
Skelli-Cohen said brand value does not always mean a brand or its hotels have to “shove experiences down guests’ throats.”
“Some guests want the freedom to explore cities in the way they want and at the pace they want,” he said, adding he has two more hotels in the pipeline and plans to move out of The Netherlands into other European countries. “We’re ready for international growth. There are so many untapped and unloved hotels in Europe.”
Korallus said his current investors did not wish to go global, but development in mega-tourism cities such as New York City and Paris is on the horizon.
MacGregor said he has eyes on eight additional European countries where he'd like to expand his company.
“Franchising? That’s a difficult one. If we want to grow, we might well need to move into that model. The intention is to make the brand very successful and do what we do very well. Owning the property allows us to easily reinvest in the hotels,” he said.