India, 1981. Hospitality student Puneet Chhatwal starts learning German with the ambition of one day becoming a Steigenberger trainee.
On 1 November 2012, he finally reported for duty at the Frankfurt headquarters. It may have taken over three decades to get there, but Chhatwal’s stock had risen markedly during the course of his meandering commute.
Having served in a number of operational roles in India, he’d eventually arrived in Europe on a French Government scholarship, earned his Master’s degree and worked in both consulting and project development, before rising to become chief development officer at Rezidor.
Under Chhatwal’s tutelage, the Brussels-based group became the fastest-growing hotel company in the world, rising from 150 to 435 properties. The move to Steigenberger may not have materialised all those years ago, but the group had no intention of letting him slip away this time around, unveiling the one-time aspirant trainee as CEO in September of last year.
Looking East for inspiration
This may read like the completion of a journey, but spend some time in Chhatwal’s company and one soon realises that he’s only just getting started. At this year’s International Hotel Investment Forum, the CEO announced Steigenberger’s first foray into China with two new properties. He is targeting ten in the next five years. It looks as though a man who became synonymous with rapid growth in his previous role is simply picking up where he left off.
But in this globalised marketplace, the German operator is arriving somewhat late at the party. While its contemporaries have raced ahead with international openings over the past ten years, only 14 of Steigenberger’s 81 properties are located outside Germany – other than four Egyptian hotels, its footprint doesn’t yet stretch beyond mainland Europe.
"We’re one of hospitality’s best kept secrets," Chhatwal declares. "But it feels as though the window for growth in China is closing. If we don’t make the move now, it will be too late."
Sluggishness over the past decade is predominantly explained by ownership limbo. The Steigenberger family had been trying to sell the group, established by ancestor Albert in 1930, since the turn of the century. They eventually found a buyer in 2009 – Hamed el Chiaty, founder and CEO of Egyptian travel and tourism company Travco Group – but the lengthy gestation period had seen the company slip well behind its peers in making inroads into the East.
"When you’re looking to sell, it’s understandably difficult to focus on growth," Chhatwal explains. "Everybody is busy trying to clean things up internally, making the business look attractive to investors. Then, when a buyer does come in, they need to take a hard look at the business themselves while deciding on a strategy. We’ve had to come through all of that and are only now ready to really push on."
The first Chinese property is scheduled to open in September of this year in a joint venture with Beijing Yun Bang Investment Trade Company, developers of AUDI World in the north of the Chinese capital. The five-star Hotel Maximilian will sit at the heart of the complex and this marriage of two iconic German brands is far from coincidental.
"During the course of the financial crisis, Germany’s image has been globally enhanced by the manner in which it has managed its economy and kept the euro going," believes Chhatwal. "The ‘made in Germany’ message plays extremely well in the emerging markets – it represents quality and solidity. Our ‘Germanness’ is something we must embrace and leverage.
"Germans are liable to understate; they’re not so into this kind of aggressive marketing and self-promotion, spending time talking about how good they are. For all sorts of historical reasons, they want to avoid the accusation of arrogance. We must proclaim our identity and shout about our achievements a little more loudly," he adds.
This brasher marketing approach is recognisable from Chhatwal’s time at Rezidor, a company underpinned by the marriage of European service philosophy and an American corporate dynamic. Is this a model he plans to impose upon Steigenberger? "One size does not fit all and you cannot simply cut, copy and paste," he counters. "Everybody here is very proud of our heritage and who we are. That’s not something I want to change; it’s something I want to communicate to the outside world."
Beyond China, Chhatwal says he is looking for development partners in Central Asia, India and the Middle East, where el Chiaty’s existing business interests and contacts should provide a useful boost. For the time being, the move into fast-growing economies will focus around the luxury Steigenberger Hotels and Resorts, rather than its city-centre midmarket InterCity brand. Chhatwal foresees the latter accounting for the majority of European growth over the coming few years.
European consolidation
But it is also critical that he establishes his prestige brand in a greater number of European markets. Efforts in this direction are being made – a new property opened at Amsterdam airport just prior to Chhatwal’s arrival, while the Steigenberger Grandhotel in Brussels has been in operation since the beginning of the year – but there is still a marked absence from European gateway cities beyond Germany.
"We must consolidate, otherwise we’ll be eaten by our competition in our home markets," Chhatwal says. "Amsterdam and Brussels are important capital locations and if we find the right opportunities in London, Paris or Rome, then that will go even further towards establishing ourselves as a European rather than German hotel company."
Rezidor’s rapid expansion under Chhatwal was defined for the most part by an asset-light strategy. While growth at Steigenberger will be founded predominantly upon management contracts, the CEO knows that a larger degree of creativity and flexibility in deal making will be required in the context of a still-sluggish European economy.
"Asset-light is a nice terminology, but it doesn’t work until you have reached the right critical mass," he explains. "If the opportunity is there, we cannot be shy when it comes to signing leases, taking on sliver equity or even buying property through leveraging the financial strength of our owner."
One might assume that private ownership affords more leeway than was the case at the publically listed Rezidor, but Chhatwal counters that the majority stake held by Carlson, and the fact that Kurt Ritter had led the group since 1989, made for a not too dissimilar operating environment. "It all comes down to being backed by strong owners," he says.
Chhatwal’s departure from Rezidor closely followed the announcement that Ritter would be stepping down at the end of 2012, to be replaced by his COO Wolfgang Neumann. This was construed in some corners as a direct response to being passed over for the top job, but the former chief development officer rejects the suggestion out of hand.
"Because Kurt and I collaborated so closely, and we are extremely similar in a number of ways, many assumed I’d be the successor," he acknowledges. "The reality is that internally we all knew for some time who had been shortlisted for the job. Perhaps I shouldn’t declare that fact so proudly – it probably works in my favour if I just let people believe what they want to believe – but my name was never on that list.
"The truth is, if Kurt had not stayed on as long as he did I would have likely moved along a few years earlier. Our partnership worked so well, I wanted to see it through to the end. Once he made the decision to step down, it seemed like the natural time for me to make a change."
A new challenge
It was not only events within the company that influenced Chhatwal’s thinking. In 2012, in a step previously taken by his mentor at Rezidor, he completed the advanced management programme at INSEAD. The experience had a profound effect, bringing into sharp focus his need for a new challenge.
"I was walking in the forest at Fontainebleau on a self-reflection exercise and it suddenly became clear," Chhatwal recalls. "I’d become known for doing development and doing it well, but we were going from record to record at Rezidor and that was unsustainable. I’d set the bar for success too high and if I didn’t get out while still at the top I might never have had the opportunity to run an entire company. I had to make the move."
Relaxed, talkative and clearly still enthused by his new undertaking, it looks as though he’s made the right choice. When asked whether he feels immensely proud to be the first Indian to lead a European hotel group, Chhatwal acknowledges its significance, but is much keener to emphasise the implications of being one of the few hotel executive to make the transition from development to CEO. "In both cases I hope I’m opening the doors for others to come," he says.
This propensity for industry firsts is a quality he shares with the individual he looks to for inspiration. Egon Steigenberger took over the hotel group in 1958. Among his many achievements, he created Europe’s first airport hotel, modernised the health resort, popularised international consultancy, revolutionised staff training and generally blazed a trail for his contemporaries to follow.
"He represents a time when the world looked to Steigenberger for ideas," the CEO enthuses. "If it was not for him I may never have learnt German or ended up in Germany. I’ve got a long-standing relationship with this company and the opportunity’s there to take it back to its roots and really build something."
He sounds like a man who is making up for lost time.
