TAASTRUP, Denmark—Peter Haaber sees an opportunity in the Danish and Scandinavian hotel industry to fuse high levels of design with select-service offerings.
He now owns and/or operates his hotels under the Zleep Hotels flag and from other chains via white-label management firm Core Hospitality.
Zleep was founded in 2003 just outside of Copenhagen, and Haaber—who is CEO of both companies—said “the concept has always been to provide limited-service properties with a design element.” Leases, management contracts and capital investment all have been put into play, he said, and Zleep also recently signed its first franchise agreement with Nordic Hotels for a Quality Hotel asset due to open next year.
But Haaber does not regard Zleep as a budget brand.
“It’s economy, and there’s a big difference, and then the design element sets us apart, too,” he said. ”Usually in this segment brand standards are boring and stick to what was happening in the 1990s. Today is a new ballgame, and the backbone is design. IKEA has exposed Nordic design to the world, and that’s probably where we’re stealing a lot from.”
When there wasn’t enough mutual interest from Travelodge to franchise the brand in Denmark, Haaber decided to create his own brand.
“(Zleep) is based on efficiency and not many staff. If it is possible to close the doors at night we will and substitute staff with tech to check in,” Haaber said. “Perhaps the model should not be working well with 42 rooms, but efficiencies make it possible. We get 60% occupancy at a different (average daily rate) and with few costs, so in comes the profit.”
Efficiency in distribution also plays a part.
“(Online travel agencies) helped us start up, but now I try and not use them,” he said. “That is often dependent on the age of hotel, with the older ones less dependent, ones at airports more so.”
Diligent design
Haaber describes Zleep’s design concept as “warm industrial, a lot of concrete and grey, with brown to keep it warm.”
Scandinavia “is concrete country, so we liven it up with LED lighting and music, which changes during the day,” Haaber said.
Zleep currently has nine hotels that comprise 870 rooms, and all of its properties are located in Denmark. Its first property was a conversion of a nursing home.
The room count varies noticeably across the portfolio, Haaber said. Its largest hotel is the 163-room Zleep Hotel Billund Airport, while the Zleep Hotel Ishøj has only 42 rooms. The company expanded its hotel at Copenhagen International Airport in January from 67 rooms to 126 rooms.
Zleep currently has six hotels in its pipeline,* and all are scheduled to open in 2019, including one opening next January in Upplands Väsby near Stockholm, which will be Zleep’s debut outside of Denmark.
The brand’s first hotel to exceed the 200-room mark will open in Copenhagen in 2020.
Zleep’s first hotel outside of Denmark will be a 152-room conversion of a former Siemens office building in Upplands Väsby near Stockholm. (Photo: Zleep Hotels)
Haaber said he’s comfortable with Zleep’s growth trajectory.
“I am not worried about going up in size,” he said. “We’re not pushing our staff levels too much. We will reach 18 or 19 hotels by 2020, 40 by 2025, but if we want to reach that number we have to look to Sweden and Norway. Sweden is a bigger market than Denmark and has huge opportunity.
“A good benchmark is Scandic Hotels. We can build next to them. (It is) one step up, full-service.”
Haaber added Zleep does own one hotel and has capital stakes in a few others.
”We are not property owners. It is more profitable to own, but for us, we know operations,” he said.
Haaber said firms such as Scandic and, to some extent, Radisson Hotel Group and Choice Hotels International, dominate the Nordic hotel landscape, but that global hotel companies are growing their presence in the region.
CitizenM will open its first Scandinavian hotel in Copenhagen at the end of 2018, and hotel-marketing firms such as Design Hotels are increasing levels of design in the region.
“That’s waking up Nordic companies to the need to do something different,” Haaber said. “Scandinavian guests also are looking for something new. The Nordics is the most socialistic place in the world. Everyone has to be and look equal, and Scandic convinced everyone that it is the normal. That was very clever.
“If you came in you had to be strong locally, especially in Sweden where 60% is local. Denmark was easier, something like 40%,” he said.
Haaber said some brands figured out how to succeed in the region much earlier.
“Until recently to join in you had to pay the price with such companies as Travelodge, which all were strong,” he said. “There was no negotiation, and that’s why Scandic and Choice were left alone and closed up the market.”
ADRs in the region also have increased, according to Haaber.
“There has been huge change, now above the 2,000 (Danish) kroner ($312) mark,” he said. “These are boutique prices. At some hotels I’m charging £150 ($193.60) and not blinking. There is a huge difference in perception. (The region is) more wealthy.”
Core business
Core Hospitality was created in 2017 and will open its first franchised hotel, a Quality Hotels asset next spring for owner Midstar.
“It is the first third-party thing we’ve done,” Haaber said.
Core also will operate two Moxy Hotels for Marriott International in Denmark and Norway.
“Last November, I was asked to operate a hotel I knew could not be a Zleep, so we started Core, which became visible as a white-label with the Moxy deal,” Haaber said.
Haaber said Core also is looking at other opportunities.
“It’s a game-changer. I thought everyone thought I was an operator, so now we have had a lot of attention from developers for assets that do not fit Zleep,” he said.
But challenges do exist, Haaber said.
“We need to get people on board,” he said. “A culture is needed, and if we do not have that, we do not have much. For Core, the challenge is training the management team, to have those who see the industry as a career. Brexit will help us, as the (U.K.) has been swallowing up all the clever people, although to have a career in any country you need to speak the language.”
*Correction, 7 September 2018: This story has been updated to correct the number of projects in Zleep Hotels' pipeline.