Event review: RECHARGE 2019, Berlin
Around 130 professionals from the serviced apartment and broader hospitality sectors converged on Berlin last week for the second annual RECHARGE event. George Sell from serviced apartment news reports.
Hosted at the Colonia Nova venue, the 2019 RECHARGE event picked up where last year's Amsterdam debut left off, with a great atmosphere of collaboration and co-operation.
On day one, a property tour of VISIONAPARTMENTS, Adina and Smartments properties was enlivened by group escape room sessions and live music, as well as food and drink (including plenty of currywurst!).
Day two got underway for around 20 hardy souls with a Cold War themed history walk around the Berlin Wall and No Man's Land in temperatures of -8 degrees C.
Back in the warmth of Colonia Nova, host Piers Brown welcomed the assembled RECHARGERS with a challenge to get involved and take more from the event than they had from any other conference. Minds were further focused by a guided visualisation session with inspirational speaker Craig Goldblatt.
The first hospitality-based session, Socialising the Box, was led by Glenn Haussman of heretostay.tv and focused on subjects including Connecting with Customers, Guest Experience, Co-Living and Community.
In one of the connecting to customers groups, led by Andrew Fowler of SACO, some of the topics raised included:
• Customers will accept a smaller room or apartment if there are good communal and social facilities at the property
• How do we find out what the guest wants pre-arrival? Is email ineffective? Should we use apps?
• The Pros and cons of auto check-in - some hotels are now removing them.
• Arrival is the most important time, when you set the tone, the feeling, the vibe, for the guest
• Simple human hospitality touchpoints must be retained, no matter how much technology we use
A group led by Steve Burns of BridgeStreet discussed:
• Challenges for sector include being found amid all the nose and data, low product awareness of brands and concepts, comparison with hotels
• Expectation management - how do you set expectations and then match them?
• The timing of communications and the importance of analytics
• How you react to being judged online and to complaints.
Katy Zuhlke of St Oberholz led a group on co-living. They talked about subjects including:
• As we have more more freedom to choose our environment, we feel more lonely. We are losing the old-fashioned family environment and are looking for a new way to feel connected.
• Are co-living communities the new family?
• Providing the human touch
Harry Harris of SUSD's group touched on:
• Age is not important - it's all about health
• Joining tribes, communities, clubs.
• Medical tourism
• Tension between use of technology and data, increased use of biometrics.
• Nanotechnology and biophilic design.
And Marc Jongerius of Zoku's group discussed:
• What is a community? Being interested in each other - human interaction, belonging, authenticity, engagement, familiarity
• Lack of authenticity - communities being forced on people. Communities must be personal and have a purpose
The next session was an investment debate, in which experts put the case for three real estate/hospitality asset classes before an audience vote on the most compelling presentation.
Andreas Martin of PKF, put the case for hotels using a background of 10 years of growth in the US, and consistent growth in the UK. He said the main attractions of the hotel market are its variety (in terms of location and product) and flexibility of contract. "Demand is constantly outpacing supply, and the evolution of the hotel sector is exponential," he concluded.
Anna Friedrich of Christie & Co then spoke about hostels, saying: "Hostels have changed dramatically over the last five years, mainly due to a growing youth travel market and demographics. 1.4 billion people travelled abroad in 2018, 23 per cent of them are aged between 15 and 34."
"They are seeking experiences, not possessions, said Friedrich, who summed up the sector's strengths as:
• An efficient business model with limited facilities.
• Design-led and compelling, high occupancy, limited operational costs and high-profit margins.
• A fragmented market, with very few brands - 90 per cent of supply is independent, there fore a massive opportunity for consolidation
Steve Grundmann of Ziegert spoke on behalf of serviced apartments, which he described as an attractive market for three main reasons: behavioural change, legal change, and investment change. "Serviced apartments offer a higher return on capital compared with other real estate classes. They have higher occupancy and REVPAR than hotels and the potential is huge. Whole building or single unit sales offers attractive flexible ownership models to developers," he said.
A panel session then looked at investor, operator and developer strategies, hosted by Adam Lowenthal of Saxbury.
The first element of the session was about deal structures. Martijn Vos of APG Asset Management said: "We like to invest in integrated models which incorporate both operations and property," while Jan Winterhoff of GBI AG said the norm for his company is leasehold, 30 year contracts but that there are more franchise models coming to market.
Lisa Neubueser of Cycas Hospitality said: "We are flexible - we're interested in JVs, leasehold, franchises or hybrids of these - long-term partnerships are important to us." And Vedrana Riley of Ciel Capital said: "Banks and investors dictate the structure of our projects, otherwise they wouldn't be financially viable, due to a lack of bank debt."
The panel then discussed the main barriers facing their businesses. These included:
• Vos: "A fragmented sector and smaller operators are a challenge - we like scale."
• Winterhoff: "The real estate market is booming, we are competing with a wide range of strong asset classes. This affects the costs of building, logistics and machinery hire."
• Neubueser: "New-builds are more challenging than conversions due to land prices and building costs."
• Riley: "Student housing is a big competitor when it comes to conversion sites. Political uncertainty in the UK, operations and labour costs."
A conversation about brexit and what is at stake for the hospitality and real estate markets proved to be absolutely compelling. Chaired by Weldon Mather of WM Consultancy, the session featured one advocate and one opponent of Brexit.
James Lapushner of Anacott Capital kicked off in forthright style, saying: "I voted for Brexit because the EU is bankrupt and broken and I don't think it can be fixed."
He then went on to say that despite the uncertainty, the impact of Brexit has not yet been as bad as predicted by many: "In the UK real estate market, things start in Mayfair and expand out to Leeds eventually. The impact of Brexit has so far been felt more in central London than the regions. There is downward pressure on high end residential and retail is a disaster, but office occupancy and rents in the City of London are stable. There has been very little impact on the regional UK. Limited supply in all sectors since the credit crisis has kept the market stable. However, there is no institutional investment from the EU in to the UK right now. US investment has largely stopped and is waiting for more price drops. Middle Eastern, particularly Israeli, and Asian money is coming in."
Lapushner also spoke about quantitative easing (QE) policies, saying: "We are only 30 per cent of the way through the credit crisis. QE has destroyed the middle classes in most Western countries. Germany is the most competitive lending economy in the world, due to the ECB's QE policy."
Benjamin Ruether of Catella countered by saying: "We do still want to invest in the UK - in London, Manchester, Edinburgh, Glasgow, and maybe Northern Ireland, but there are concerns over a possible hard border between Northern Ireland and the Republic. In the event of a hard Brexit, I think the pound and the euro will both suffer against the dollar. A weaker pound will make the UK more attractive."
When asked to make a prediction, Lapushner said: "I believe we are heading for a hard Brexit. Globally nobody is happy with their governments but they don't know how to change the situation. The UK has two plus points in the case of a hard Brexit - it has control of its own currency and it has finished QE."
From the audience, Andrew Harrington of AHV Associates - who introduced himself as an active member of the People's Vote movement, which is calling for a second referendum - disagreed, saying: "According to the betting markets, there is an 80 per cent chance that the UK won't leave the EU on March 29 and there will probably be a nine-month extension to Article 50."
After a good lunch, the next session was called Beyond the Benchmark. Anett Gregorius of Apartmentservice.de introduced the session by saying: "I have been in the German serviced apartment sector for 20 years and this is the most exciting phase to date." She gave an overview of the German market which included the following information:
• In Germany there are 620 properties with more than 15 units, totalling 36,600 units. The biggest markets are Frankfurt, Munich and Berlin.
• There are lots of new brands coming to the market between now and 2022.
• Average rate, for stays of 14 nights-plus, is €75.
• There is still a lot of unmet demand in the market which is expected to grow to 100,000 units by 2030
• Forecast trends include the formation of sub-brands, larger developments in terms of unit numbers, more micro apartments and more co-living/co-working spaces.
Christian Strieder of STR then presented new figures for the whole of 2018 for the first time, representing a worldwide survey of 1100 serviced apartment properties with 115,000 rooms. Highlights included:
• Singapore, Germany and the UK were the strongest performing markets.
• In Germany, serviced apartments equalled or outperformed the hotel market in Hamburg, Frankfurt, Berlin and Munich
• In the UK serviced apartments also outperformed the general hospitality market with occupancy of 81.8 per cent compared with 77.9 per cent, ADR of £130 (£94) and REVPAR of £106 (£73).
In the Empty Chair session which followed, where a member of the group suggests the subject matter, Paul Rands of BridgeStreet initiated and moderated a debate about micro apartments. There was an interesting poll when he asked everybody in the room to stand, then asked them to sit down when he reached the minimum size of apartment they would be happy to stay in, counting down from 23 square metres. The majority in the room were seated by 18 square metres but there were a handful who were prepared to go down to the low teens.
A debate on "the end of alternative" which discussed the effect of the sharing economy on the hospitality sector, featured Dean Schreiber of Oakwood, Markus Lehnert of Marriott, Will Smith of the Plum Guide and Christoph Kasper of the Homelike. Click here to read about the session on our sister site Short Term Rentalz.
Jonathan Humphries and Kilian Vollbach of HoCoSo then hosted a development workshop, in which the collective was broken down in to smaller groups to decide various aspects of a notional new apartment brand called Recharge. The conversations and findings - which were presented after a talk about the psychology of branding by Flavilla Fongang of 3 Colours Rule - were fascinating. look out for Jonathan's summary of the session here on Serviced Apartment News soon.
Piers Brown wrapped up proceedings by thanking the collective for their energy and contributions which had undoubtedly helped to create a memorable and successful event.
To see speaker presentations from RECHARGE 2019 click here.
"It was a great event, I experienced it again as fresh and inspiring. A nice crowd of people attending and an absolutely lovely venue!! Thanks for organising." Marc Jongerius, co-founder, Zoku
"It was one of the most professional events I attended and yet it had the necessary informality to foster new thoughts. A truly inspiring concept. Well done and thanks." Markus Lehnert, VP international hotel development, Marriott International
"I really believe it's one of the best events I've ever been to. There was bags of energy and commitment from all who attended which is often not the case at conferences, and this was facilitated and inspired by your innovative and fun approach to the programme. It really did encourage people to engage, open up and share ideas, which led to great debate and honest discussions with a real authenticity." Paul Rands, VP development, BridgeStreet
"I enjoyed Amsterdam last year and this year in Berlin was just as energetic. The conference manages to get all the delegates actively participating and happy to engage. It is refreshing to attend an event where everyone is very happy to engage and share ideas and information freely, without being ego driven. There was a wealth of industry insight given by some really interesting shapers of the sector. There is a great balance of fun sessions and within a short space of time everyone is happy to engage and chat to each other and there is no time to feel left out as the energy is infectious." Harry Harris, managing director, SUSD
"The content was great, the topics were great and relevant and I really enjoyed the Escape Room but the best bit was probably the coffee breaks when we could chat with some very interesting people. You are the only ones to put on events like this and we want to support this and you, as we come over especially from Asia for this." Dean Schreiber, managing director, Asia Pacific, Oakwood
"Recharge is an outstanding event for anyone who wants to learn about the serviced apartment sector in a way that will inspire and energise them. Its format challenges and motivates; it is relaxed and fresh, while also focused and business-like." Su Pecha, managing director, ESP Business Development