Your company’s goal is to build a network of European premier hotels. Are you equally open to all major cities in Europe, or are you targeting some of them with greater urgency?
We are initially focused on key locations in Central Europe, which is home to the House of Julius Meinl, but are looking to expand to other destinations beyond Central Europe in the future. We are regularly looking at opportunities in Western Europe and also in the US and hope to announce more openings soon.
How deep into your planning and your expansion were you when the pandemic hit? What parts of the strategy (financing, type of product, selection of markets) did you have to reconsider? Which parts were still “fit for purpose” in today’s environment?
Traditional hospitality venues tend to be neither flexible nor adapted to fit guests’ needs. We saw the opportunity to create an offering that was different even before the pandemic. We believe we’ve identified a gap in the market that meets the needs of the modern traveler. The hospitality sector is a centuries old industry that prescribes to you as a traveler who you are and where you must stay. The reality is different nowadays.
The modern family travels for a variety of reasons at the same time, so we wanted to create a product that enables customers to embark on this journey and offers a comprehensive experience. When starting The Julius, we firmly believed that success for the company would be rooted in providing a high-quality experience that is shaped by the varying needs of all the different users. And now that we operate the residence, we don’t feel any different.
Why do you think there ended up being so few hotel sales during and after Covid?
2021 was a period where money was still available and still cheap. Many properties, in fact the whole industry, was suffering but with the availability of cheap money many owners managed to survive these difficult times. The environment is completely different today. With rising interest rates, those properties that cannot capture their share of the market recovery will suffer and some of them will falter. We will see more deals in the next year or two.
How would you describe the availability of financing and the current pricing?
Financing is tight in the current markets. Banks have become very selective but once you convince them of your concept, funds are available. We see a big gap between the financing for operating assets and development assets. The premium that banks take for the development risk are huge. There is an abundance of alternative providers of debt and quasi-equity, but their terms are very difficult to fulfil.
How quickly will the 5-star market recover? Is it realistic to expect a return to 2019 levels in Prague? Or would you argue Prague has a significant lack of high-quality product, relative to demand?
We recently hosted Cushman & Wakefield at The Julius Prague where they have presented a 2022 analysis of the CEE Hospitality market: RevPAR is almost seven times higher, occupancy more than three and a half times higher, and the room rates 67% higher (than 2021). The room rate is now 4% higher than in 2019. As the key indicator, RevPAR had highest increase in Prague in 2022. I believe these numbers speak for themselves, the trends for Prague are very encouraging. The Julius Prague bookings and stays confirm this data: I’d say that there is a high demand for accessible luxury stays that provide guests with services and amenities that make them feel “home away from home”.
What were Julius Meinl Living’s first steps in the Czech market? Where does it fit into your plans for CEE and Europe in general?
The Julius Meinl family has a long business history in the Czech Republic. Therefore, Prague is a natural choice. Few people know this, but the Julius Meinl family originates from Kraslice, a small town near the German border in the Karlovy Vary region. The Julius Meinl family has been active in the region for 160 years, and the creation of The Julius is a natural evolution for the family, expanding our spirit of hospitality and overall service offering.
In 2021 The Julius was born, a natural progression, extending and honouring the founding principles of the House of Julius Meinl, bringing our impeccable standards to a new sphere of hospitality, and extending our expertise to new audiences and locations. Our destinations are not traditional hotels, they are a fusion of hotels and living spaces. Recognising the importance of flexibility for the modern traveller, we have created a concept that epitomizes the idea of “Home away from home”.
Our residences offer tech-enabled services, self-check-in and contactless room entry, as well as restaurants and on-site shops, stocked with premium House of Julius Meinl products. In addition, spacious communal areas, relaxing lounges and professional co-working spaces will enable guests to network, meet like-minded people or simply unplug.
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