Berlin The posh Steigenberger Group had promised three times that its budget hotel brand Zleep would be launched in Germany in 2022. After the Hamburg-Altonaer Volkspark and Frankfurt Airport, Hanover was also supposed to get a savings offshoot last year. At least that’s what the then CEO Thomas Willms announced at the beginning of 2020.
It was to be a direct competitor to Munich’s budget pioneer Motel One, with small rooms measuring only 16.7 square meters but with a fine Scandinavian design. The designer Fritz Hansen was brought into the house for the furnishings.
But three years and two CEOs later, the hotel chain founded in Denmark and majority-taken over in 2019 has still not arrived in this country. In the third quarter of 2023, things should be ready at Berlin Airport, according to the building developer Project Immobilien in mid-February. Zleep Managing Director Peter Haaber curbed the expectations again to the Handelsblatt: “We expect the opening at the beginning of 2024,” he said.
The budget chain designed by Haaber initially seemed ideally suited to quench the thirst for expansion of the new Steigenberger owner, the Chinese hotel group Huazhu, as quickly as possible. He took over the group, which operates under the umbrella brand Deutsche Hospitality, for 700 million euros at the end of 2019 in order to build up a hostel empire with him within a very short time.
From what was then 125 locations, which, in addition to Steigenberger and Zleep, also included hotel brands such as “Intercity Hotel”, “Maxx” and “Jaz in the City”, by 2025, according to the company, should have grown to 600 to 700. The Chinese even made plans for an IPO.
Nothing of all this can be seen to this day. At the beginning of 2023, Deutsche Hospitality reported a number of just 124 locations in the Federal Gazette. At the same time, the high losses caused by Corona, which piled up to 67 million euros in 2021 alone, prevented any thought of going onto the floor. In addition, the new owner from Shanghai had to transfer 150 million euros in loans to the non-performing acquisition in the first two years of the corona virus in order to prevent insolvency.
51 percent sold to Steigenberger.
(Photo: Steigenberger)
Managers in the group report that the Chinese still lacked understanding for the corona-related investment stop. In August 2020, Steigenberger CEO Willms left the company, successor Marcus Bernhardt resigned less than a year and a half later.
New CEO to drive expansion
Since April 2022, Oliver Bonke, as CEO of Steigenberger Hotels AG, has been tasked with pushing ahead with the desired expansion. But like his predecessors, he also knows that it will remain difficult for the venerable Steigenberger brand to open up the desired number of new locations in this country. After all, properties such as those operated by the five-star chain with the Frankfurter Hof, the Parkhotel in Düsseldorf or the Grandhotel on the Petersberg near Bonn are difficult to multiply. In Germany, for example, the luxury brand recently focused solely on the renovation of existing houses. At best, there were new openings abroad, such as recently in Qatar and in Marsa Alam, Egypt.
As a result, the hotel group, founded in 1930, is relying on its budget brand Zleep for the expansion requested by Huazhu – albeit with a considerable delay. Of course, the houses in Hamburg, Frankfurt, Leipzig and Hanover have not been given up, says Haaber. There will also soon be a Zleep hotel in Constance on Lake Constance. “By 2025, 25 Zleep locations across Europe are realistic,” he says. The first openings will also be seen in Prague and Zurich in 2024.
Until then, the overnight chain, which started 20 years ago, will remain almost exclusively a Danish company. Zleep operates 15 stores in Germany’s northern neighbor, and market entry across the border was only tested with one store each in Stockholm and Madrid.
“It was pretty easy to get started in Denmark back then,” recalls the 59-year-old Haaber. “Because the Danish market is so small, there were hardly any economy hotel chains in the whole country.” That’s why he was able to build up the budget chain Zleep at a fast pace. “We were already profitable after six months at most sites in Denmark,” he says.
Zleep wants to benefit from the Chinese
In the end, however, the ex-manager of the former Hilton subsidiary Scandic lacked the money to continue growing. In 2018 he therefore entered into negotiations with the Steigenberger Group, which at that time was still under the Egyptian billionaire Hamed El Chiaty – and was considered to be well-funded.
Haaber signed the deal in January 2019. But just ten months later, he was to surprisingly bring a new majority shareholder into the company. Since then, Zleep has been 51 percent Chinese, at least indirectly.
The native Jutlander let the put option granted to him for 2021, with which Haaber could have offered the remaining 49 percent to the Steigenberger Group, pass unused. One reason for this may be that the Frankfurt headquarters gives the Zleep founder almost a free hand in management.
At the same time, the budget chain has recently benefited from the customer loyalty program of the Chinese parent company. With “H Rewards”, as the loyalty program is called, guests from China can also book with the Danes and collect valuable loyalty points. The potential clientele is huge: According to Huazhu, “H Rewards” has more than 200 million members worldwide.
For Haaber, the internationalization of his Danish chain comes just in time. Because the almost uncompetitive seclusion at home, which brought him consistently higher hotel rates than is now foreseeable in Germany, has been over for a few months.
German rival Motel One opened its first hotel in Copenhagen in October 2021, followed by Accor’s budget chain Ibis in February 2023. And the French price-breaker B&B Hotels has also announced its presence in Denmark. The franchise specialist wants to start in Vejle in southern Denmark in April. In his home country, Zleep’s peaceful sleep should come to an end.
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