The budget hotel chain B&B Hotels ranks among the “Hidden Champions”. In Germany, there has never been a hotel brand so successful that it won the “Most Wanted Investment Partner Award” from the Treugast Solutions Group consulting firm three times in a row. How did they do it?
text: Tinga Horny
Prizes bestow glamour and renown on winners and presenters alike. And this was the case with the “Most Wanted Investment Partner Award” handed out by the Treugast Solutions Group consulting firm. When a hotel company such as B&B Hotels scoops up this prize again and again, then it must mean they are doing something right. But what, exactly? In the economy segment, B&B Hotels are up against Motel One and Ibis, who benefit from greater brand recognition. However, B&B Hotels GmbH has been on the market for twenty years, and based on the number of hotels, it is the third-largest hotel chain in Germany, indeed the biggest in the budget market. But advertising is obviously not one of the hotel group’s priorities.
“Even if we still aren’t that well-known, the concept has proven successful on the market,” declares Max C. Luscher, Managing Director of B&B Hotels GmbH. He sees three main factors as crucial to the success of his company. A marketable product, team work and strategic partnerships.
The product is not new. After all, B&B hotels are the pioneers of the two-star hotel industry. Right from the start, the trick to the concept has been that individual hotels have a link to their environment. “We are local hosts,” stresses Luscher. Those contracted by B&B Hotels are not just lumped in together, instead they live with their family on site, are integrated and do not change site every few years like with the big chains.
There is no shortage of applicants for hotels. The business model suits potential hoteliers, because the stakes aren’t as high as with franchising. The operator enters into a management contract with B&B Hotels and gets a share of the sales. No other expenditure is attached, except for staff costs. Candidates are ideally recruited from head of department level in the hotel industry. “Front office managers of large four to five-star hotels or F&B managers of a three-star hotel are pressured from above and below. With us, you’re your own boss,” explains Luscher.
The Managing Director of B&B Hotels speaks clearly when it comes to teamwork. It is a natural approach, based on the realisation that it comes down to having the right team and that these days, nothing can be achieved alone. Luscher seamlessly transfers this attitude to what he calls “strategic partnerships”: business relationships with real estate investors, construction firms and hotel contractors.
“Fairness and respect” come first and listening is a virtue. “B&B Hotels is a reliable partner. We mean what we say,” emphasises Luscher. The competitive factor of integrity is often an advantage, when it comes to acquiring projects and partners.
Plus B&Bs also offers decades of experience in the economy segment. So long before the Internet came along, the budget chain had already combined check-in and check-out into one step. Check-in is the same as check-out, saving both time and staff. And thanks to digitalisation, this system is becoming even more efficient – in both the front end and the back end. The guest books, pays and receives a numerical code that they use to check in to the room – done!
When searching for properties, having a fixed set of criteria helps you to stay within budget. Consequently, new builds with around one hundred rooms are preferred. Re-branding is often not worth it, as the room sizes in older buildings vary too much. Guest rooms measure approximately 15 square metres and are set up with standardised furnishing modules. If guests get the feeling that each hotel is different, then this is due to the colour scheme, which varies depending on the local area, and the images that hang above beds, which are always related to the region. To take the B&B Hotel Frankfurt West as an example, images of the regional drink “Äbbelwoi” (apple wine) add local flavour. In Frankfurt City East, due to the proximity of the financial region, it’s all about the money
B&B Hotels even demonstrate flexibility when it comes to the question of location. “We’re exactly where the guest needs to be,” says Luscher. And that’s practically anywhere where there is enough demand for overnight stays. In contrast to France, German B&B hotels are more often found in “central locations in relevant cities”. That's because many cities with 100,000 inhabitants are just minutes away from the motorway. So there is no need to settle in cheaper peripheral locations.
What experts such as the Treugast Solutions Group truly admire about B&B Hotels GmbH is the company’s ability to learn. The prize was awarded, firstly for an extremely standardised product that is continuously developed, and secondly for the system of using highly independent hotel managers. “Financially speaking, this model is very successful and has achieved one of the highest operating margins in the German hotel market.” says Moritz Dietl, Managing Partner of the Treugast Solutions Group.
So Max Luscher can live with the fact that his hotel brand hasn’t exactly reached its peak in terms of brand recognition yet. Investors and guests are already flocking to B&B, because “we are just the right product for a wide target market”.