• Was it clear already at the project planning stage for Europa-Allee 42 that a Capri by Fraser would be one of the hospitality offerings there?
Yes, indeed. The Capri by Fraser is part of a construction project, which also includes a Premier Inn and a Hampton by Hilton. For projects of this magnitude, we work in such a way that even before construction starts, the question of who is the operator and who the purchaser has been clarified. However, the fit-out of the Premier Inn will be completed a little later than the others, because the project was initially intended for another leaseholder, who then jumped ship. Therefore, the contract with Whitbread, the parent company of Premier Inn, only came into existence in August 2014; something unusual for us to happen in the construction phase.
• Was it obvious from the outset that Frasers Centrepoint Limited would acquire the property?
Certainly, since this is their business model: Frasers Centrepoint Limited buys the property and Capri by Fraser operates it under a management contract. Citadines takes a similar approach: if Citadines operates, then Ascott, the parent company, is the buyer. The same goes for Adina: Adina operates and Toga Hospitality buys. The new Adina hotel we are currently building at Frankfurt’s Osloer Strasse, will be the first that is not based on an owner-operator model. Adina has for the first time signed a German lease contract; the owner of the property is Deka Immobilien Investment. However, Adina’s new shareholder, the Singaporean private equity firm Far East Orchard, will revert to the owner-operator model for future projects.
• Do you prefer the parent company of the operator to acquire the property?
For most operators of serviced apartments that’s actually their business model. For us, however, this is of secondary importance.
• Colliers International was involved in the brokerage of the Capri by Fraser deal. Did you have any direct contact with Frasers?
If international companies prepare their market entry in Germany, they usually appoint international agents to accompany them in the search for suitable locations and development partners. Colliers at that time presented to us the product, the company and the expansion plans. However, from the very start all our negotiations were directly conducted with Frasers.
• Citadines, Adina and now Frasers. Do these clients have an issue with you working for their competitors, and sometimes even in the immediate vicinity?
The companies themselves inspect the potential building sites. Capri was, of course, aware that we were doing the Citadines – at that time already under construction. Adina knew that we worked on projects for Citadines and Frasers in Frankfurt – last but not least the projects are presented on our website. The companies accept that, knowing that they are in good hands with us and that we complete the projects for them professionally and on time. Needless to say they would prefer us not to build for others, yet so far this has never been a reason for an exclusion.
How do the concepts differ?
Adina comes closest to a classic hotel product. In an Adina hotel you will find a full restaurant and bar, conference areas and even a swimming pool as a rule. The rooms are larger than normal rooms, have a kitchenette and are designed for long-term stays; however, the average stay is only just above that of normal hotels. Adina strongly depends on urban tourism – in Berlin alone there are three Adina hotels – also, Adinas are particularly popular with families. Classic serviced apartments, on the other hand, can be found more often in cities with a high proportion of business travellers, and then immediately in business quarters without any attractions for tourists. This is quite typical of Citadines – especially in France, where they operate, inter alia, three huge properties in the La Défense business district of Paris. Citadines does without restaurant and bar, providing only a very small gym and hardly any conference facilities. The use of the apartments is clearly intended for long-term living. The most consistent long-stay product is certainly the Residence Inn, for which we have not yet been active so far. Residence Inn has reduced the ancillary areas to a minimum; only a small breakfast area is provided. Among all serviced apartments it has the highest proportion of permanent residents.
• All three serviced apartment providers you are currently working for belong to corporate groups (Citadines to Ascott, Capri by Fraser to Frasers Centrepoint), or have large shareholder proportions (Adina / Far East Orchard) – and all are based in Singapore. Is this a mere coincidence or is there a reason behind this?
Serviced apartments are well established in Asia for many decades, and Singapore is known to be the ‘Switzerland of Asia’ – there’s a lot of money in the bank vaults.
• You mentioned Residence Inn. Could Marriott’s long-stay brand become your fourth serviced apartment client?
Well, construction of our Moxy project at Stuttgart Airport will start shortly. Operator is the SV Group, Marriott’s master franchisee, a corporation committed to grow the Marriott brands Moxy and Residence Inn in Germany. Since dual projects under one roof are fully in trend, the idea came up at an early stage to connect Moxy and Residence Inn. On the site in Stuttgart that was not appropriate, but elsewhere there are considerations to combine both projects.
• How many serviced apartments are still feasible for Germany?
The potential is immense, because hardly anything is established on the market so far. There is just one Residence Inn in Germany, namely in Munich, and there are only four Citadines. Compared with the United States and France that’s next to nothing. Representatives of Ascott told us the other day that they could well imagine four properties in Hamburg alone. And Frasers has two other projects coming up. Berlin will get a Capri by Fraser, and in Hamburg the old Oberfinanzdirektion building at Rödingsmarkt is converted to take up the luxury brand Frasers Suites. We are also engaged in talks with Frasers – as with all the others – on additional sites.
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