Mergers and acquisitions to fuel Deutsche Hospitality’s Middle East expansion

The German hotel company Deutsche Hospitality has announced that its expansion in the Middle East will be driven as far as possible through acquisitions and organic growth.

At the beginning of the year it was announced that the hotel company plans to expand its portfolio in the region to 20 establishments by 2023.

Marcus Bernhardt, CEO Steigenberger Hotels AG / Deutsche Hospitality, told Arabian Business that this includes the opening of the first Steigenberger Hotel in Doha this week; the Dubai Intercity Hotel is due to open in October; and Bernhardt said his lifestyle brand Jaz in the City will now open in 2023 or 2024.

Deutsche Hospitality announces expansion plans for the Middle East

Siegfried Nierhaus, Vice President Middle East of Deutsche Hospitality, told Arabian Business that four hotels are to be opened this year, with further openings planned for the next two consecutive years

He stated, “This is the natural growth we have and now we are here to connect with investors and perhaps other smaller hotel companies to see what is available for an acquisition or a merger.

“We have our strategic plan to grow organically, but at the same time to grow with hotel groups; everything between 50 and probably 100, 150 hotels, something like that. That is what we are investigating in the Middle East. ”

In November 2019, Frankfurt-based Deutsche Hospitality was taken over by the Huazhu Group for around 802 million US dollars. Huazhu has more than 6,700 hotels in over 400 cities and is one of the five largest public hotel companies in the world by market capitalization, alongside Marriott, Hilton, Accor and the InterContinental Hotels Group.

Bernhardt said the ambitious goals of the new owners include that Deutsche Hospitality should be one of the three largest hotel groups in Europe by 2027.

And he acknowledged that it was a harsh reality of the coronavirus crisis, which has hit the hospitality industry worse than most, that smaller groups may not have the finances to weather the economic downturn caused by the pandemic.

Marcus Bernhardt, CEO Steigenberger Hotels AG / Deutsche Hospitality.

He said, “It’s a pandemic. On the one hand, it is a crisis for some and an opportunity for others. But unfortunately life is like that. And in the end we also see it positively when we do that, in particular, I speak for Europe, because we are talking to certain groups, we will also ensure that the employees can stay, ensure that the companies continue to run and owners who have invested in real estate do not lose the value of the asset.

“I think for the Middle East we have seen that it will be very difficult for us as a company to grow little by little. So if you really want to make a difference and say, okay, we’re going, I wouldn’t say an important player, but also a player in the Middle East, we have to look at companies with 20, 25, 30 hotels to take over and take over to benefit from economies of scale more quickly.

“When independent hotels like Doha come on board, of course we won’t say no, we’ll take them. But in order to achieve the rate of growth that we have for 2027, we have to make acquisitions, there is no other way. ”