Deutsche’s 51% buy of Zleep opens new markets to both
Deutsche’s 51% buy of Zleep opens new markets to both
24 JANUARY 2019 9:30 AM

Deutsche Hospitality’s majority acquisition of Danish-based Zleep sees the German company enter the economy segment and Scandinavian market, while opening up new markets for Zleep south of its current Nordic home.

FRANKFURT, Germany—Deutsche Hospitality has acquired a majority stake in Danish hotel firm Zleep Hotels, which brings a fifth brand under its umbrella and the first in the budget and economy segment.

No monetary details were announced, but the deal represents Deutsche’s debut in the Scandinavian market, as well as giving Zleep a foothold in central Europe.

Zleep was founded in 2003 by Peter Haaber, who will remain the brand’s CEO. Zleep will join Deutsche’s brand portfolio, which includes Steigenberger Hotels & Resorts, Jaz in the City, IntercityHotel and Maxx by Steigenberger, which launched in March 2018.

Thomas Willms, CEO of Deutsche, said the buy strengthens and expands Deutsche’s competitive position.

“With a 51% investment in the family-run Zleep Hotels, Deutsche is … creating the best possible conditions for further growth of all brands,” Willms told Hotel News Now.

Haaber owns and operates hotels both under the Zleep Hotels flag and for other chains via his white-label management firm Core Hospitality, which is not part of Deutsche deal, although Deutsche will work with Core to invest in Scandinavia.

There are 11 Zleep hotels in Denmark, while its debut in Sweden is scheduled for later this month. The brand’s 11th hotel opened 21 January in the Danish city of Aalborg.

“Zleep Hotels are the perfect complement to our brand portfolio,” Willms said.

In a September 2018 interview, Haaber said his hotels are in the economy segment but “there’s a big difference, and then the design element sets us apart. … Today is a new ballgame, and the backbone is design. IKEA has exposed Nordic design to the world, and that’s probably where we’re stealing a lot from.”

Following the confirmation of the deal, Willms said Haaber has built an impressive company in Zleep.

“(Haaber) has created a remarkable success story in the past few years in establishing a well-known brand among those guests who are price-conscious but at the same time emphasize on design and quality during their hotel stay,” Willms said.

Willms said Zleep has four more hotels in the planning stage in Scandinavia.

“Both parties, Deutsche Hospitality and Zleep, will invest a multidigit million amount in the further development of the company,” he said. “Zleep also offers the platform and the knowledge for Deutsche Hospitality to expand in northern Europe with all brands.”

After 15 years in business, Haaber was searching for a partner with which to grow. He said what attracted him to Deutsche was its passion and spirit.

“I was looking for someone who understands where we see Zleep in some years,” Haaber said. “With the synergies of Deutsche Hospitality, we are able to grow even more intensively and to establish Zleep hotels in more countries.”

He said Zleep’s development pace won’t lose any momentum.

“Zleep has a good presence in Scandinavia,” Haaber said. “We are strong in Denmark and are really looking forward to the opening of our first hotel in Stockholm, Sweden … but we want to keep the pace and establish more hotels. Together with Deutsche Hospitality we will build a strong ally for more Zleep hotels in Europe.”

Scandinavian-boosted spectrum
Deutsche wanted to add a budget/economy brand to its stable, but one that offers as luxurious a product that can be offered in that segment, Willms said.

Deutsche Hospitality has a luxury product in Steigenberger Hotels & Resorts, a transport-hub offering in IntercityHotel, a lifestyle brand with Jaz in the City and a neighbourhood-centric option with Maxx by Steigenberger, Willms said. Since Maxx’s launch last year, the brand has opened one hotel, in Bad Honnef, 10 miles southeast of former German capital Bonn.

“With Zleep, Deutsche Hospitality is now positioned as we imagined it to be founded in October 2016,” Willms said. “We now can offer our guests everything from the leading luxury hotels in Europe to the stylish city hotel. There are hotels for business travelers as well as budget-conscious city adventurers.”

Willms said he’s excited to grow his company’s portfolio in Scandinavia, citing the region’s mix of modern, young cities, friendly people and great nature.

“Scandinavia is one of the upcoming markets in Europe,” he said. “Zleep has shown in this market how to excite the guests with good quality and a convincing concept. The participation in Zleep is for us the market entry in this region, also for the other brands of Deutsche Hospitality.”

“So the different brands complement each other perfectly and we can develop together,” Zleep’s Haaber said, who added in 2017 his hotels saw occupancy between 54% and 80% and average daily rate between €59 ($67) and €98 ($111).

In total, now with Zleep under its umbrella, the portfolio of Deutsche Hospitality now stands at close to 150 hotels on three continents.

“(Deutsche) is currently in the pipeline with more than 30 other hotel openings, with a focus on international locations,” Willms added.

New Steigenberger Hotels & Resorts’ assets include properties in India, Thailand and Egypt, while new Jaz in the City hotels include those in Austria and the Cape Verde Islands.

In December, Deutsche partnered with Luxembourg-based bank Commerz Real to formulate a European hotel real estate fund totalling €250 million ($284 million) to develop up to eight hotels.

Deutsche will contribute approximately €12 million ($13.6 million), while €92 million ($104.5 million) will come from third-party investors.

*Correction, 24 January 2019: This story has been updated to correct a photo credit.

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