|What Grand Hotels Really Cost.|
By Roland Wildberg ~ Weekly Exclusive - Views On The Latest Trends
Thursday, 30th May 2013
|Exclusive Feature: Destruction of money is something that fascinates people - regardless of the anger of investors: Recently, a particularly noble form happened to the most luxurious hotel in Germany.|
How much does a grand hotel cost in investment and operations? On the opposite, how much does it yield? Well, none of us has a clue about how much in prominent properties with resonanent names that each tourist knows by heart really has to be paid for. Probably a lot.
Sometimes it comes out - and then we can hear impressive figures. Red numbers. In Heiligendamm, the arguably most prestigious grand hotel of the continent, they were so red that the traditional hotel's epithet "White town by the sea" must be probably soon changed in "Red city by the sea".
The sprawling ensemble of opulent palaces, surrounded by park and forest, as well as a wide beach of the Baltic Sea, was founded 220 years ago as first seaside Spa in Germany - the glamorous British Spa at Brighton is only about ten years older - and 100 years ago it might have been something like the Monte Carlo of the European North.
Then it disappeared behind the iron curtain, and got forgotten. After the reunification of Germany investors became attentive, bought the ensemble in 1996 for $40 million then and during renovations phase again put $164 million in the huge complex. Since 2003 it is attempted to market the really Royal estate as a five-star resort.
But eventually even the Kempinski group as a hotel operator got to the end of their rope and quit 2009: An occupancy rate by 44 per cent in summer and 12 per cent in the winter was in the long run no good figure head. Then the investor tried to lead the hotel himself, which of course could not work.
A year ago, the company went bankrupt. 1,900 Investors, mostly individuals, lost countless millions. This week the liquidator has found new investors who completely took over the resort. Specialist media report dubious financial backers from Turkey.
In fact, it is hard to see a real estate company operating such down-to-Earth Web site (www.palladio-berlin.de) going to operate a five-star hotel with 240 employees and 181 rooms, two restaurants of whom one has a Michelin star. The second investment firm does not even have a website (!). However, it is not our task to evaluate this.
We are in particular interested in how much the happy buyers had to fork out. Actually, the money suitcase from Istanbul may have been not overly conspicuous: the entire resort did cost them an equivalent of $38.7 million.
Mind you: The now do NOT own a ruin, NOT a ruined company, but an intact luxury resort that should have produced even low profits in previous two years.
This is money burning at truly luxurious level. How does the process continue? We will inform you when the luxurious money hole Heiligendamm is again for sale.
This is strictly an exclusive feature, reprints of this article in any shape or form without prior written approval from 4Hoteliers.com is not permitted.
Roland Wildberg is Travel Writer and Correspondent based in Berlin, Germany. He started as an Editor for the National daily 'Die Welt' (tourism section), later on switched to a freelanced career and nowadays mainly publishes on the Web. Observing the hospitality industry always has fascinated him as it looks like the perfect combination of sleeping and writing – work-live-balance as its best.
Roland also heads the annual 4Hoteliers ITB Berlin news micro-site journalist and video/photo teams. For more info: www.4Hoteliers.com/itb.
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