More than a dozen Danish hotels are back under management of the hotelier who created the concept for the properties' economy brand over a decade ago.
In August, Denmark-based third-party hotel management company Core Hospitality added Zleep Hotels' 14 Danish hotels with a total of 2,288 rooms to its operations portfolio. Core Hospitality CEO Peter Haaber founded Zleep back in 2013 and was with the brand over the years as it changed ownership twice.
It's a story of international expansion and strategic bolt-on growth to enter into new markets, but it also is a story of how a global pandemic can wreck carefully laid plans.
Rise of the Zleep brand
Within six years of Zleep's founding, German hotel firm Deutsche Hospitality Group bought the majority share in Zleep in January 2019. Then in early 2020, Chinese hotel firm Huazhu Hotels Group bought 100% of Deutsche Hospitality, which as of early 2024 rebranded as H World International.
“When [Deutsche] bought Zleep, it was a honeymoon for a year, and there was a 12-month period of talking about development. We signed a few more hotels in Denmark and also in Germany, Spain and the Czech Republic,” Haaber said in an interview with Hotel News Now.
When Huazhu acquired Deutsche Hospitality in 2020, executives at Zleep were informed only a few weeks before the ink on the deal was dry. Zleep became relatively speaking an even smaller part of a larger company with ties to Germany and China.
“They are listed, a huge company, but, of course, it was a bit of surprise. When you sell half the company, you know that the management team do not stay on forever and ever, but even though [Deutsche] is a different kind of business than [Zleep] I was surprised it happened so quickly,” Haaber said.
Pandemic 'put a stop to everything'
Then the COVID-19 pandemic changed everything, including what was planned for Zleep Hotels. International travel was off the table almost everywhere, and in China, lockdowns lasted longer than in many Western countries.
“They signaled they would be changing management, and then we were hit by coronavirus, and that put a stop to everything. Like everyone else, we went into survival mode,” Haaber said.
Zleep's integration with the rest of H World International's hotel brands — Steigenberger Hotels & Resorts, IntercityHotel, Jaz in the City, Maxx and Ji Hotel — didn't get done, Haaber said.
“We never integrated fully. Then we looked at each other again and suddenly H World had another board to report to, and they changed management, too," he said.
But what was never in doubt was that the Zleep Hotels brand was well-regarded.
“Oliver Bonke [H World’s CEO] really liked the brand,” Haaber said. “He knows it is easier to develop an economy brand than it is a 5-star one, especially when you concentrate on Europe. We got along. He loved our brand; we loved him back. There were ideas and thoughts, but, unfortunately, they were not able to push as much into lease contracts as I envisaged.”
Haaber said the discussions as to what would happen with Zleep Hotels were productive.
“It just came kind of naturally, questions being asked as to where to bring the company next. H World has a strategy of being more asset-light, which is also how H World in China is pushing. I am more of an operator. You can call the hotel whatever it is you want,” Haaber said.
“We had limited access to our Chinese management, and it had already been hard to come from being a small privately owned and operated company into a huge system, [Deutsche] being an ‘old lady’ of 90 years, in which it has built systems and structures.
“It, too, cannot change overnight. I have a lot of respect for that, but it limited our agility,” he said.
Managing hotels in the Nordics and beyond
Now, Haaber's focus is on leading Core Hospitality's management platform, and he will no longer have a role with the direction of the Zleep Hotels brand. But he gets to decide what to do with the 14 Zleep Hotels in Denmark that are now a part of Core Hospitality's operations portfolio.
“It is back to being in my own driver’s seat. We’re not 100% there, and we need to get rid of some of the bureaucracy. Culture permeates quickly,” he said.
H World International continues to own the eight Zleep Hotels outside of Denmark in Berlin, Frankfurt, Hamburg, Lausanne, Leipzig, Madrid, Prague and Zurich.
Core Hospitality operates 19 hotels across five brands. In addition to the Zleep portfolio in Denmark, it has five hotels affiliated with Marriott International — two Moxy Hotels in Norway, a Fairfield by Marriott and a Residence Inn by Marriott in Copenhagen, Denmark — and the independent Kirk Suites in Vejle on the Danish mainland.
By the end of 2024, Core Hospitality hopes to sign a couple of new hotels. One of those will be on the North Sea coast of Denmark and likely will be an extended-stay product, with branding to be announced soon.
“It will not be a Zleep. There is opportunity to convert hotels to our existing brands. The region still has very little brand penetration, and there is opportunity to bring in more brands,” he said.
“Everything up in the air. We can do what we want to. Zleep is a bit of a baby for us, and here we have a strong base in a small country, although we cannot do many more. In the other Nordic countries, there are more opportunities,” Haaber said, adding that he has always regarded neighboring Sweden as the regional market with the biggest growth potential.
He said Core Hospitality will focus on Northern Europe in terms of opportunities to grow its management portfolio.
“We do have competition, but there are not too many white labels. The market is less mature, and it is difficult for international operators to come in, too. They need to understand the language, our politics and our labor market, which is very expensive. That is difficult, with €20 ($22) per hour for a housekeeper, plus pensions and holiday pay,” he added.
Core Hospitality could also look to grow its hotel management portfolio in other parts of Europe, Haaber said.
“We now have lots of friends in Germany. Everything always remains possible,” Haaber said.
More than 20 years ago, Haaber planned on being a white-label hospitality in Denmark and the Nordics, but at the time he could never offer the scale hoteliers were looking for, he said.
“I remember talking to Grant Hearn, Travelodge’s CEO [between 2003 and 2010] about being a franchisee in the Nordics. He was not quite sure where that was, but he asked me how many hotels I could build in Denmark. I had to say a higher number, so I said 20. ‘Yes,’ he replied, ‘and what after the first six months?,” he said.
Neither H World International nor Huazhu Hotels company responded to requests for comment before publication time.