Now is the time for Berlin-based Primestar to move into the luxury hotel space. Enter the June Lux brand.
Roland Rausch, chairman and co-owner of Primestar, said in an interview that June Lux is the culmination of four to five years of work to help reset the firm’s hotels platform.
Owner-operator Primestar manages hotels on behalf of international-branded firms and its own stable of June-branded hotels it launched in 2022. The brand includes the boutique June Six and aparthotel-style June Stay.
“Three or four [June Lux] deals are nearing completion,” Rausch said.
The target locations are markets “in which there are either few 5-star hotels or there are hotels [of that level] that are old school,” he said.
Primestar approaches both its owned and franchised portfolio with the mindset of how to secure opportunities that maximize cash flow and add value, he said.
For June Lux, the employment of digitization is not about losing luxury aspects.
“There is demand for luxury in Germany,” a market that often is described as price-sensitive, Rausch said, adding that 82% of Germany overnight stays are from Germans themselves. He and his team analyzed 15 cities in Germany, and the conclusion is that they did not “have a lot of fresh product.”
“With inflation as it is, we have an opportunity in the middle,” he said.
Primestar shuns what Rausch calls “big Germanic boxes,” or hotels that are across the spectrum of the country’s upper segmentation.
“We can offer a sub-€200, 5-star hotel. This is attractive, especially as the corporates are cutting back,” he said.
Rausch added German consultants have told him they can expense only up to around €250 on a night’s hotel stay, so Primestar’s take on upscale and luxury hotels is serving an underserved segment.
“This sweet spot has a natural augmentation and is very price-efficient,” he said.
Boris Simm, Primestar’s managing director, said in a news release on the brand launch that the “hospitality industry continues to shift towards digitalization, efficiency and new use cases. With June Lux and the broader June ecosystem, we are able to offer a highly adaptable product that connects travel, work and living in a way that is both scalable and future-proof.”
Finding growth
Primestar's four current June Hotels include two in Germany and one each in Austria and Lake Garda, Italy. Each hotel contains Primestar’s WorX-branded co-working space.
Its franchised hotel portfolio consists of 17 hotels in Germany and Austria with a total of 4,056 rooms, and Primestar has plans to increase this number to 30 hotels.
A new franchise Primestar signed in January is for the 195-room Hilton Hamburg Elbtower, due to open in 2029. The company also recently signed another deal with Marriott International for the 88-room June Six Salzburg, a Tribute Portfolio Hotel, which Primestar acquired in February.
“We have the option to co-brand with Marriott, to add Bonvoy, but this is very much to be done on a case-by-case basis,” Rausch said.
Sixty percent of the hotel's occupancy already derives from Bonvoy, “but it is specific as there is not a lot of supply [in Salzburg] and a lot of U.S. travelers love to go there,” he said, referencing the perennial movie favorite, “The Sound of Music.”
The upcoming Hilton in Hamburg is another project in a long-term partnership with the U.S. hotel firm, Rausch said. This will benefit from Primestar’s tech stack, which he said is close to being as advanced as it could be.
“In Hamburg, there is no Hilton. We are loyal people, so it completely made sense [to partner on the project]. We can see the opportunities from employing our digitalization, as some of back of house [international branded hotel firm-capabilities are] not as advanced,” he said.
One focus of June Hotels is the use of technology to better the guest experience, Rausch added.
“We just need one guest manager providing the social element, but even parking is fully digitized,” he said.
Real estate
On the real estate side, Primestar is opportunistic, Rausch said.
“We create value with the purchase price,” he said. “And we’re reluctant to mix the [property company] and the [operating company], but we do see value on both sides. Now, we are seeing more value on the lease side. There is a lot of pent-up supply. … We are looking at anything that creates cash flow.”
He said more opportunity for businesses like Primestar stems from additional stress increasingly felt by German banks and institutional landlords.
Beyond its home country of Germany, Primestar is exploring opportunities in Austria and Switzerland and Poland. He added he has found the perfect partner and expects to enter Poland in the next 12 months.
“It is very tech-savvy, operational costs are 30% less than they are in Germany, and the economy is much stronger. [Average daily rate] is on par with Germany’s,” he said.
As for hotel ADR in Germany, Rausch said that “there is a little bit of an ADR fight, with competitors struggling, even with the country’s secondary and tertiary cities not performing.”
“Last year, we had a decent 3% ADR growth,” Rausch said.