Deutsche Hospitality: standing for German values

5 October 2017

Deutsche Hospitality now accounts for 130 hotels in operation and under development across three continents, but it was not always thus. Claus-Dieter Jandel, chief development officer, speaks to Phin Foster about why an internal cultural shift was necessary in order to make such global expansion possible, how his decades of experience within the company helped deliver it, and why Deutsche must never lose sight of its founding German values, even as it evolves into a truly international operator.

Three decades is an impressive length of service with any company, but in the context of today’s hotel industry it verges on the remarkable. In an environment that has become increasingly brand-driven, scale-obsessed and global in outlook, talent is ever more transient; staying put is all too often equated to standing still.

In fact, being a loyal, long-standing servant can work to one’s disadvantage when an organisation undergoes dramatic, transformative change. Making a fetish of the new frequently leads to outright rejection of the old.

As in so many other ways, however, Deutsche Hospitality clearly does things a little differently. For more than two decades, while its peers sought to launch countless new brands and conquer fast-emerging economies, Steigenberger Hotels, as it was then known, continued to focus on its core markets and eschew the promised riches of the East.

This was a situation brought on more by a state of ownership limbo than a reactionary mindset, and things started to change with the 2009 purchase of the operator by Hamed el Chiaty, founder and CEO of Egyptian travel and tourism company Travco Group.

In the years since, the group has undergone dramatic transformation, debuting in a number of locations, including the Middle East and China, launching an entirely new brand, Jaz in the City, and resolutely focusing on evolving into a truly international hotel company, a process that culminated in the group’s rebranding as Deutsche Hospitality in 2016.

Shared DNA

A new name, perhaps, but a moniker that also hints at a more nuanced take on corporate reinvention in a globalised marketplace. This is an organisation that wants to celebrate and draw upon its German heritage and history; a culture forged over generations will play a fundamental role in helping to shape its future.

Who better to help lead this process than an individual whose personal history and values are intrinsically linked with those of the company he has represented for the last 35 years?

“It’s actually 35 next year,” Claus-Dieter Jandel corrects me with a chuckle. “Having said that, I first joined Steigenberger in 1975, so it’s pretty difficult to separate our DNA. Over such a long time, they pretty much combine to become one and the same.”

Not that the German hotelier has ever stood still. The executive vice-president and chief development officer joined the development team in 2009 at the height of the financial crisis – “My friends and colleagues thought I was mad,” he laughs – but this is just the latest stop in a career that has actively sought out new challenges since its inception.

“This is the story of my life,” Jandel says. “I may have been with the company for a long period of time, but I’ve never done a job for more than five years or so. I started as a young man, returned in 1988 to be a general manager, was an area vice-president, served as chief human resources officer. My whole career has been about change and new ideas, new perspectives.”

Jandel’s intricate knowledge of the workings of the group was invaluable when it came to helping introduce a culture of growth within an environment that had become somewhat staid and risk averse. He intrinsically understood that the early stages would demand incremental change, rather than revolution. “If I had been someone doing development elsewhere, parachuting into Steigenberger and announcing, ‘Okay, this is how I’ve been doing things and it’s now how things are going to be done here’, I would have failed,” Jandel explains.

“This company had not grown in 20 years and was not used to growth. The initial priority had to be motivating people across the organisation that growth was something that we should be aiming for. That was a task my experience meant I was very well positioned to do.”

It’s an approach that has clearly paid dividends, with international development only gathering momentum in the years since and the mindset of the organisation as a whole shifting accordingly. Jandel has opened 40 hotels during his tenure as CDO, with nearly 30 more signed and in the pipeline. When asked when he knew that the company had truly become international, he jokes that there came a point about three years ago when team members stopped being shocked by receiving emails in English from their German colleagues, but Jandel remains at pains to stress that ‘Germanness’ continues to be a guiding principle in terms of how the company operates.

German values

He believes that the fundamental values of honesty, reliability and fastidiousness are not just Germanic, but also deeply ingrained in the company’s fibre. A large part of the CDO’s role is ensuring they are retained and refined as the group grows globally.

It’s essential we look in the mirror and ask ourselves, ‘Are we truly going to be able to provide what the investor needs?’ Only when we can deliver a clear ‘yes’ will we start negotiating.

“I am 100% responsible for that and there can be no point where it is excluded from my daily thinking,” he says. “Especially since the global financial crisis, Germany has come to be associated with a high level of ethics; we’re seen as more straightforward and we will not make promises that cannot be kept. Of course, that means getting deals done can take a little more time, but once the contract is signed you know it is a deal you can trust.

“That is how we operate. We won’t announce a property until everything is confirmed and in place. Deutsche is not listed on the stock market, so I’m not under immense pressure to announce ‘x’ number of signings in any given period of time. Of course we want to grow, but we don’t have those external pressures that can push you into places you don’t want to go or to make promises you might be unable to keep.”

It’s an approach that developers like to hear and goes a long way towards accounting for why Deutsche is gaining real traction from what was virtually a standing start. However, the fact that so many of its competitors were able to steal a march in emerging markets during the first decade of the millennium must present some issues when it comes to trying to gain a foothold in new regions.

Does this necessitate a greater degree of flexibility when it comes to negotiating with owners?

“Certainly,” Jandel concedes, “but it’s the same when the roles are reversed; our competitors must be a lot more willing to compromise when entering our home turf, where it’s easier for us to cut a deal. When you’re coming into a market for the first time, there may be trades that need to be made. But that doesn’t mean giving it away for free. We’ll ask for the same things as our competitors, but in terms of technical services, assistance during construction and so on, of course we can’t be completely immovable. We will always try to adapt our contracts to an owner’s needs – within reason, of course. That’s just good business.”

One of Jandel’s goals is moving the Deutsche portfolio from a 50/50 lease to fee-based contract share – something made rather more difficult because the German market is still so driven by lease-based development. The CDO places the current balance at somewhere closer to 60/40 and acknowledges that there remains scope for investment in bricks and mortar should the right opportunity arise.

“We know exactly what markets we want to enter with which brands and through what types of contract,” he says. “We would prefer not to be taking on leases in the UK, for example, but if a suitable property in London was to become a possibility, it would certainly be something to consider.

You need people who have lived the story… but you must also bring in new people with their own ideas. If you only have old boys like me running the show, it becomes very difficult to move forward.

"Where we’re talking about flagship developments, hotels that will help us drive further growth in a given region, one may sometimes need to invest a little more.

"Not always, however; we were able to secure a management contract in Dubai without already having a presence in that particular market.

"It comes down to honesty. Whenever we start negotiating, it’s essential we look in the mirror and ask ourselves a very simple question, ‘Are we truly going to be able to provide what the investor needs?’ Only when we can deliver a clear ‘yes’ will we start negotiating. Again, this is something very German.

"If you ask me, ‘would you like to take over this property?’, my answer will never be immediate, even if it’s in a location I desperately desire to be. Give me the information, let’s check the figures, find out exactly what you’re looking for and confirm precisely what we can provide. A deal is only worth doing if it works for all parties: the owner, operator and guest.”

Remember your roots

With three brands at his disposal to meet those needs, sitting in three distinct market segments, Jandel clearly feels well equipped to deliver across a range of locations and opportunities.

There have been whisperings of a new brand offering, but the CDO remains coy on the subject for now – true to Germanic form, an announcement will be made when there’s something concrete to announce, and it’s worth remembering that Jaz in the City was revealed a mere matter of months before the opening of the first property in Amsterdam.

Amid all this talk of international expansion, might it become difficult to retain such close connections to one’s roots and founding principles? With colleagues now corresponding in English and upcoming openings from Bangalore to Bangkok, one wonders how much of the old culture can remain.

“It’s important to find the right balance,” Jandel replies. "Of course you need people who have lived the story, and I am not alone in having been with this company for a very long time, but you must also bring in new people with their own ideas. If you only have old boys like me running the show, it becomes very difficult to move forward.”

This is a story that continues to be written and – old boy or not – expect Jandel to remain a primary author for some time to come. The next chapter might just be his most exciting yet.

Detsche Hospitality's Claus-Dieter Jandel has been an integral part of his firm for 35 years.
An IntercityHotel will be developed at the heart of Muscat, Oman's capital city, by 2020.
Steigenberger Hotel El Tahrir in Cairo, which opened earlier this year.

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