Steigenberger's strategy

Japan and South Korea may have said farewell to their summer footballing guests, but at least one man is already thinking four years down the road, to when Germany hosts the next World Cup.

Roger Niemeyer, director of sales for privately owned German company Steigenberger Hotels and Resorts, opened the company's first UK sales office in London in April in a bid to attract more British business and leisure travellers to its hotels on the Continent. Steigenberger has 79 properties, most of them in Germany in cities such as Frankfurt and Bonn. Just 15 hotels are scattered through Austria, Switzerland, Spain, Egypt and the Netherlands. The German market provides 82% of the guests, and the new move marks a push to increase the numbers of guests from the UK.

About 78,000 roomnights a year are currently sold to British guests, but Niemeyer's target is to double that within five years. However, with no hotels in the UK market, Steigenberger's name is not readily recognised in Britain. So Niemeyer has had to start from scratch, introducing the name and the brands to travel agents, corporate travel managers and the public.

What, then, is Steigenberger? The company, which was established in the 1930s, saw a turnover of £282m in 2001 with brands in four market segments. The bulk of the group's properties are four- and five-star hotels under the Steigenberger banner. However, in the interests of diversification, it also has seven three-star informal business hotels under the Maxx name, styled along a 1930s America theme; 20 three-star InterCity hotels offering basic business comforts at such locations as mainline railway stations; and seven no-frills, budget-priced Esprix hotels. "Four brands give us the chance to look at any existing market and decide which brand to go with," says Niemeyer.

The InterCity chain started as a partnership with Germany's railways, but Steigenberger now owns it fully. It is a business hotel concept that works because rail is the preferred mode of transport in Germany for any distance less than 500km, particularly among business travellers. The hotels are either next to the railway stations in each city, or no more than 100m away - easily within walking distance. Room cards entitle guests to free use of local public transport - including, in some cases, transport to and from local airports.

The benefits of InterCity and Steigenberger's other budget brands is an area Niemeyer hopes to push in the UK. To this end, he has launched a new brochure detailing the 33 hotels under the Maxx, Esprix and InterCity names in Germany, Austria and Switzerland. The average achieved rate in these brands, which Niemeyer describes as equivalent to a British three-star hotel, is £36.

City destinations
On the leisure side, the company acts as a tour operator in Germany and produces brochures on spa breaks, city breaks and summer holidays. Steigenberger plans to package 10-15 city destinations with tour partners in the UK.

Niemeyer says that flights into Germany by British-based low-cost air carriers have also helped to boost his business - Buzz flies to Berlin and Ryanair takes visitors to Lübeck and Hahn. However, it is the business market he is really after, and the budget hotel brochure targets business travellers with corporate rates, and meetings and incentives packages.

The corporate market is particularly strong for the Steigenberger group, bringing in 63% of the company's total business, even though it has several resort hotels.

At the Steigenberger city hotels, where the corporate client is most likely to stay, the average room rate is £69. These city hotels find that business travellers make up 78% of their trade but, even at the resort hotels, 35% of revenue comes from the corporate market. At the budget and InterCity brands, the corporate market accounts for 63.5%.

Niemeyer will be targeting German companies with UK bases, to encourage them to make use of existing preferred client deals, and he estimates that there are about 1,000 such potential customers. He says: "We know by looking at our corporate agreements that many of these UK-based companies are not aware they already qualify for discounted rates through their parent companies."

Next on his list are blue-chip British companies in the pharmaceutical, manufacturing and financial sectors with business in Germany, but Niemeyer is also interested in small and medium-sized businesses. Unlike many hotel companies, Steigenberger offers corporate discounts even to those companies that offer it minimal business.

"Companies like Siemens can clearly offer us a substantial number of bednights, but even a small consultancy offering us 20 bednights is still worth us talking to," says Niemeyer. "We have a matrix to work out what discount to offer, and it works whether it's for 20 bednights or 2,000 and beyond. We are interested in building roomnights, and this is a long-term strategy for us."

Companies qualify for discounts across the group, regardless of which hotel or brand receives the business.

Steigenberger generally owns its properties, but Niemeyer believes the time is not right for the company to open its own hotels in the UK.

"Of course," he says, "we'd like to be in the main cities like London, Manchester and Birmingham, but it is not likely to happen in the next five years. The entry costs to get into London are too high." This is so even though Niemeyer says that a joint venture is not out of the question.

While expansion of its British business is on Steigenberger's wish list, the company is still focused on filling gaps in the German home market, such as Munich and Cologne, where it has yet to open any hotels. Planned openings for next year are an InterCity hotel in Bremen in February and another in Düsseldorf the following month.

As for the World Cup in 2006, Niemeyer hopes to use it as a carrot to attract agents to work with the group in the next few years. "We will have many people asking us for rooms," he says, "so we'd like them to work with us and give us support now."

Steigenberger Hotels

www.steigenberger.com
Hotels: 79
Brands: four
Group turnover, 2001: £282m
Gross operating profit, 2001: 30%
Group occupancy, 2001: 60.4% (city hotels, 62.6%; resort hotels, 60.9%; budget and InterCity hotels, 58.7%)
Average room rates, 2001: city hotels, £69; resort hotels, £60; budget and InterCity hotels, £36
Room yields, 2001: city hotels, £43; resort hotels, £37; budget and InterCity hotels, £63
Business split, 2001: corporate, 62.9%; leisure, 37.1%
Guest mix, 2001: city hotels, 77.8% corporate, 22.2% leisure; resort hotels, 35% corporate, 65% leisure; budget and InterCity hotels, 63.5% corporate, 36.5% leisure
Employees: 5,586
Investment in hotels across the group, 2001: £25m
Planned openings: InterCity hotel Bremen, February 2003; InterCity hotel Düsseldorf, March 2003