Talking development: Jan Winterhoff, GBI AG

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• When did GBI first become involved with the serviced apartment/extended stay sector, and what was the initial motivation to enter the market?

"GBI AG is definitely the serviced apartment frontrunner in Germany. We started talks with Singapore-based Citadines as early as in 2005 when apartment hotels were still largely unknown in the German hospitality industry. We rightly anticipated that in large cities such as Berlin, Munich or Frankfurt - similar to the United States, South East Asia and also Britain - business travellers, freelancers and city newcomers would wish to make good use of such flexible, preferably longer-stay accommodation offers. Consequently, we launched our first Citadines apart'hotel development in Munich's Arnulfstrasse. It was completed in 2009 in accordance with schedule and budget."
"As we predicted, the habits of travellers are changing in Germany too, particularly in the major cities and urban conurbations. Quite obviously there is no longer just the "standard guest", i.e. business travellers or tourists out for a quick stay in a hotel, using its traditional comfort just for a few days with dining in local restaurants. The number of guests looking for stays of several weeks or even months increased, and of course they had completely different needs and expectations. For example, they want to provide largely for themselves and need more space to work in the apartment."
"Another turning point came in 2012, which prompted us to establish a brand of our own. GBI AG jointly with its associate the Moses Mendelssohn Foundation, had become very active in providing affordable student housing. We had just opened our first SMARTments student residence in Hamburg, where demand for student living was particularly high. Directly after the completion of the project - situated near the main railway station - a surprisingly high number of companies approached us directly asking to rent apartments for their own employees. Actually, we could have let our entire building directly to business customers, something which is not permitted under German legislation. But it proved to us very clearly how extreme the need was in Germany's big cities for affordable serviced apartment offerings."
"In 2014, the first SMARTments business started in Hamburg, where we had taken over and renovated an existing building. In 2016 we opened our first completely newly designed SMARTments business in Munich. Last year, three properties in Berlin and one in Vienna were added. With this listing, the SMARTments business has proved to be a great success story: GBI AG is the number four in the range of branded serviced apartment hotels in Germany. And we will definitely upgrade our position in the next few years. More project developments are in the pipeline."

• A recent Catella report says the German market is set for record growth and is seeing increased investor demand - does this tally with GBI's experience?

"Absolutely. There is an amazing level of interest from international investors in Germany's serviced apartment sector. I am currently in contact with investors from Asia, the United States and several European countries. They appreciate in particular the stable and safe economic situation in Germany that is reflected by the growing numbers of business travellers and long-stay guests in our major cities. GBI AG, as the leading hotel developer in Germany, is a natural port of call for forward-looking property experts in the hospitality industry. In the wake of classic hotel investments, serviced apartments have become an asset class of its own in this country as well."
"We fully share the Catella assessment according to which the German serviced apartment market is set for record growth. Things speak for themselves: the work climate and social structures continue to change at a breath-taking pace in the whole of Europe, and Germany is no exception. Take an example: managers or clients under duress to complete a project on time increasingly take a constant local and temporal flexibility of employees for granted. Not to forget in this process: digitalisation is a dramatic trend in a highly industrialised country like Germany, a trend that continues to accelerate such developments."

"Another aspect: 'multi-locality' has not only professional reasons, but increasingly private ones as well. The number of long-distance relationships is increasing. In so-called patchwork families, there is a growing need to move to another city for a few weeks and therefore to look there for temporary accommodation. Likewise, this applies if the generations of a family live in different cities. All in all, a huge market is urgently waiting for new accommodation ideas and concepts."

• What are GBI's plans for the roll out of the SMARTments brand in terms of new locations and product evolution?

"Among others, an additional SMARTments business in Berlin is currently on the drawing board, and we continue searching intensely for suitable sites all over Germany. Today, we are not only interested in projects in the big cities, but also in economically strong more medium-sized locations. For example, we are going to build our next SMARTments business in Mannheim; as the centre of the booming Rhine-Neckar region, this is exactly the right place to go. We can also imagine such projects in cities such as Wolfsburg or Ingolstadt, places with an equally strong economic structure. Furthermore, Austria is a region of special interest to us; we have concrete plans for Vienna and other cities."

"As to product evolution: We are constantly working to perfect the SMARTments business brand. However, our overall concept is up to date and proven to fully meet the current needs of business travellers and other long-stay travellers. All SMARTments business in Berlin and the other cities are fully booked. SMARTments business can be seen as a 'budget' brand for this target group. We offer accommodation for long-stay guests at very competitive prices compared to budget hotels."

• You recently developed a Capri by Fraser property - are there any other developments for serviced apartment brands in the pipeline?

"We will soon start construction work on a second Capri by Fraser, in Leipzig, and also on our second Adina in Düsseldorf. We had built the first hotels of both brands in Frankfurt. Another serviced apartment hotel is planned in Heidelberg; negotiations with several international hotel groups are on the way. We realise that there is a need for different types of serviced apartments in Germany. Our own SMARTments business brand is more like a kind of budget serviced apartment. We want to provide accommodation for long-stay travellers at costs significantly below the rates of budget hotels. But we also work for other brands on differing concepts that will be in high demand as well."

"We are glad to note that GBI AG maintains its leading position as the largest hotel project developer in Germany's major cities. This was proved by the ranking published in April by bulwiengesa, one of the largest independent surveying and consulting companies in the real estate sector in continental Europe. The hotel properties either completed by GBI AG between 2015 and 2017, currently under construction or due for completion by 2022 comprise a total of around 137,000 square metres of usable space. It is a truism that defending a lead in the developers' ranking is harder than climbing to the top. We are happy to say that our pipeline is well filled - also with serviced apartment developments - and that our leading position is not attributable to one-off effects."

• How do you think companies such as Airbnb are affecting the market in Germany? Are they attracting business travellers away from more traditional accommodation types?

"Airbnb and their ilk initially had a significant influence on the market because they were the first to give a large number of travellers the opportunity to find accommodation at affordable prices for longer stays, enabling self-catering and offering more individuality and flexibility. However, there's now a wide variety of alternative products on the market for these target groups. In addition to long-stay and apartment hotels, these include a variety of hostels as a very cost-effective alternative. But also parts of the classic hotel business are changing. As a result, the influence of Airbnb private offers for long-term stays is declining. Needless to say Airbnb is reacting to these trends in a professional manner. Nowadays, the procurement of commercial facilities becomes another important line of business with the portals."

• Do you have plans to expand your serviced apartment development activity beyond Germany and Austria?

"Yes, we are closely monitoring the serviced apartment markets in the Netherlands and Switzerland. There, the circumstances, the market growth and the legal basis are largely compatible with our concept. Naturally, we are quite busy with a multitude of potential locations in Germany and Austria that we consider to be suitable for our purposes."


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