Going Deutsche - CEO Puneet Chhatwal

In a globalised marketplace where scale is king, branding has never been more significant. It is a promise of familiarity for guests travelling into the unknown; the signifier of consistency for investors looking to build portfolios; an instantly recognisable calling card for operators entering new markets.   

We hear a lot about the need to live up to one’s name, but what happens when you outgrow it? In October 2016, Steigenberger Hotel Group announced to the world that it was embarking upon the next leg of its journey towards becoming a global power player, and would now be travelling under a new brand identity: Deutsche Hospitality.

The decision came as something of a surprise. There may be a fixation upon all things shiny and new in the hotel world, but history, legacy and a grounding in traditional hospitality values still carry great currency. The Steigenberger brand dates back to 1930, when the eponymous Albert Steigenberger acquired Baden Baden’s Europäischer Hof. Currently undergoing extensive renovation work, the property remains in the group’s portfolio as the physical incarnation of an operator that has always stayed true to its roots.  

But that doesn’t mean there haven’t been changes. Steigenberger acquired a second brand, InterCityHotel, in 1989, and a third, Jaz in the City, debuted in Amsterdam in late 2015. There has also been a more general shift in strategy, instigated by the arrival from Rezidor of Puneet Chhatwal as CEO in 2013. Since then, the group has debuted in a number of new markets, including Turkey, China, the UAE and Oman, signed a joint venture in India targeting an initial 20 properties in the next 15 years, and expanded the portfolio to the point that it now stands at over 120 hotels, with 25 at the development stage.

The promise of quality

While the launch of a third brand under his watch made the original logo redundant – five stars, three red, two grey, represented the respective positions of Steigenberger in the luxury segment and InterCity in the midmarket, but left no room for Jaz – Chhatwal insists that the move represents a more profound shift. A significant focus of the initial phase of his tenure was applied internally, convincing colleagues that they were now representing a truly international player. This is the culmination of that process.

“There’s now a belief that, yes, this is really happening and we can really do it,” he explains, after we’ve found a quiet corner of a central London hotel bar. “When you’re just signing contracts and talking about things opening three or four years down the line, people still don’t quite see it as a reality. From the start, I was very focused on getting properties in the system that were ready to open. It means the whole story of going international quickly became credible.”

But what exactly is the CEO and his team trying to say with Deutsche? The name Steigenberger Hotels & Resorts
will continue to resonate as the group’s flagship luxury brand, but it seems that Chhatwal was looking for an umbrella corporate identity that would say more about the intrinsic qualities and intentions of the group as a whole.

“We are transitioning from a traditional German hotel group to something that is more modern and cosmopolitan, but retains its German identity,” he explains. “We have brought so many new nationalities into the group – Dubai alone has something like 30–40 – and that changes things. However, we ensure that all of those people can speak some conversational German, that it remains a core part of our identity.

“At the other end of the scale, there are people who have been with us for more than 40 years. We’re incredibly proud of them and they’re incredibly proud to have represented Steigenberger. We could not have them thinking we were becoming something else entirely; it had to be a name that was synonymous with what they’ve been doing all these years.” 

Chhatwal appreciates that Brand Germany is more associated with manufacturing, engineering and finance than hotel operations, but that’s something he feels is an oversight and hopes to change. The CEO points out that it’s difficult to think of a destination luxury hotel that has not had a native German-speaker as general manager at some point in its history, with the region’s schools and apprenticeship systems consistently churning out some of the world’s finest hoteliers.

At the same time, he recognises that the Deutsche epithet comes with a heavy burden of responsibility. “Deutsche Lufthansa, Deutsche Post, Deutsche Bank: the word stands for quality, reliability and consistency, an unwritten promise. Not a word spoken, but so much said,” he begins. “Now, we become part of the family. That brings huge pressure to get things right, but it’s a pressure that we must embrace, to deliver on that promise.”

International presence

This self-imposed pressure is the commitment to have at least 125 properties in operation and a further 30 in the pipeline by 2020. The group is currently opening hotels at a rate of one every two months. Steigenberger Hotels & Resorts enjoys the largest share in the brand mix, but InterCityHotel will be a major driver of growth over the years ahead.

In July, the first InterCity property outside Europe launched in Oman. A Chinese debut followed four months later in the coastal city of Qingdao. Dubai arrives in winter 2017/18. Closer to home, the InterCityHotel Braunschweig opened in November 2016, the first to boast interiors developed by Italian architect Matteo Thun, a design template that will be adopted as standard by all new properties. One wonders whether the recruitment of a superstar designer will see the brand set its sights beyond its traditional focus of railway termini.

“In some cases perhaps, but certainly not in German-speaking markets, China or anywhere else where the rail network is strong,” Chhatwal replies. “We have something unique that nobody else offers and attitudes are also starting to change. These areas were once considered dirty, dusty places – L’hotel de la Gare was not somewhere anyone aspired to stay. Those days are over. We’re seeing a real renaissance of train stations and the investment being pumped into them has made these areas incredibly attractive. We have a headstart.

“The idea behind the new design reflects that and broadens the potential customer base, creating more of a balance between modern and traditional. It’s a very exciting time for the brand.”

At the time of our conversation, Chhatwal is on the verge of announcing Jaz in the City and Steigenberger properties in Cape Verde and Tunisia, since confirmed. Scheduled to open in 2020, it’s a new market for the group and a clear indication that, with Amsterdam already open and Stuttgart arriving in 2017, the select-service lifestyle Jaz brand is prepared to look beyond urban centres for growth.   

Having arrived somewhat late to the party when it comes to establishing an international presence, Deutsche Hospitality is playing an interesting game in terms of where it identifies and pursues opportunities. The choice of Qingdao to launch InterCityHotel in China is a case in point. Home to the country’s largest Oktoberfest – having seen pictures, this a rather more impressive feat than it might initially sound – the city of six million inhabitants enjoys historically strong German ties and the property is based in the Sino-German Ecopark, a joint venture between the governments of the two countries. In 2017, a Steigenberger hotel will open in Heihe on the Chinese-Russian border.

“I personally believe that at this stage in the game, there is more opportunity in these secondary and tertiary markets,” Chhatwal says. “We’re still talking about cities of five to ten million, there’s less competition and you can establish yourself as the best player locally.”

Local ties are vitally important. In June, Deutsche Hospitality entered a joint venture with India’s MBD Group to establish MBD Steigenberger, targeting the country’s fast-growing luxury sector. Chhatwal is also clearly enthused about the potential of the Iranian market, though reports earlier this year of a development deal having already been signed were premature.

“We’re looking for partnerships in these markets because we can’t do it alone in the time frames required,” he explains. “Iran is one of the most exciting markets out there and, again, there is less competition. There are also historically close trading ties with Germany. InterCityHotel would be a good fit, but at the moment we’re focusing attention on establishing Steigenberger – with the effort required to get a hotel up and running , it makes sense that we make it a 500–600-room full-service property.”  

The group is also betting big on the Egyptian market. There is huge excitement surrounding Steigenberger Hotel El Tahrir, one of ten properties in the country either open or under development, its first in Cairo and a real statement of intent in the heart of the city. 

The cultural change is not all about new signings and markets though. Chhatwal speaks of the need to deliver “incremental improvements” and “fine tuning” at all levels of the business. “It’s how you deal with the next generation; manage relationships with hotel schools; relate to owners; handle the speed of change; ensure you’re an employer of choice, a responsible company,” he explains. “We must focus our efforts at all levels. Growth alone is not enough.”

Chhatwal is committed to all three brands standing on their own two feet, and they certainly occupy distinct positions in the market. One wonders, however, whether the group rebranding might also be a precursor to the launch of a fourth. The question is met with a smile and one can detect a distinct glimmer in the eye, but he remains understandably coy: “We’re investigating all possibilities,” he eventually allows.

Whatever happens, it is clear that the transition to Deutsche Hospitality reflects a consolidation and doubling down of
the strategy instigated under Chhatwal’s watch over the past four years, as opposed to a marked change in direction. It may bring its own pressures and obligations, but the CEO clearly relishes the challenge of living up to its promise.