European Coffee Retailer Julius Meinl Seeks Riches by Creating a Hotel Brand

House of Julius Meinl, which sells premium consumer goods and coffee primarily in Central Europe, has been branching into premium apartment hotels.

• The Vienna, Austria-based brand — a 158-year-old retailer of coffee and gourmet foods — plans to open 15 properties, with a total of about 2,000 guest rooms, within six years.
• In July, it opened its first aparthotel, Julius Prague. The 168-room property is fully owned by the company. It has a 9.5 out of 10 rating on Booking.com
• Julius Meinl’s effort is a litmus test for other premium-goods brands that might create hotel brands as both retailers and hospitality seek new avenues for long-term expansion.
• Retailers are following a path pioneered by fashion brands. This path has sometimes worked seemingly well, such as Bulgari Hotels (a partnership between the jewelry house and Marriott International since 2004). It has also sometimes cratered, such as when fashion brand Missoni attempted to create hotels.

Julius Meinl Living, based in Prague, is owned by the Meinl family.

• The company believes its best real estate opportunity for serviced apart-hotels overlaps with the Central European cities it is best known in as a brand, such as Budapest, Warsaw, Vienna, and Bucharest.
• “We’ll announce some new acquisitions and development starts soon,” said Julius Meinl VI, a director of Julius Meinl Living.
• While its focus is getting to 15 Central European properties, its follow-on target is to expand to Western Europe, probably starting with Germany and Italy. “We are negotiating for five other properties throughout Europe,” Meinl said.

The Julius brand is a bet on “bleisure,” or blended leisure and business travel, being here to stay.

• Units typically come with kitchenettes and pull-out couches or beds.
• “We are the people who add ‘accessible luxury’ to your lives,” Meinl said, referring to the company’s brand in Central Europe.
• Convenience is the core of the product, Meinl said. A web app lets guests do many routine administrative tasks remotely.
• Efficiency is also core to the operations. Less than 30 staff members are managing 168 rooms. In essence, “extended stay” is more cost-efficient operationally — plus automation has helped reduce labor needs.
• “If you’re in the premium quality segment, you have pricing power,” Meinl said. “Extended stay has lower costs. That’s what attracted us to the segment.”
• “We are actively looking for properties in prime city centers in our target cities,” Meinl said. “We are first and foremost looking to acquire luxury assets that have at least 100 rooms. We’re leaning toward having each building be LEED Gold graded.”
• The free breakfast at the hotel includes Julius Meinl products, such as coffee, sausages, and the sweet treat of a chocolate cake and Kaffee mit Schlagobers (coffee with whipped cream). But the hotel isn’t serviced by Julius Meinl, and it’s expecting customers to come regardless of their awareness of the brand.
• This is more of a financial play using capital earned from premium coffee and cold cuts, in other words.

Julius Meinl Living took one detour before hitting upon its current strategy.

• Before it adopted its current strategy, the business unit bought the Art Nouveau Hotel Evropa in Prague and aimed to have Marriott International’s W Hotels operate it. It then desisted. Meinl didn’t provide more details.
• “It was before my time,” Meinl said. “We started developing it before we decided upon pursuing the apart-hotel strategy.”
• Running 15 apart-hotels is a business model with more margin cushion in its eyes, he said.
• “We’d like to get to the point of managing more than 1,000 keys,” Meinl said. “You get scale advantages from that point.”
• “My goal is to bring institutional capital in,” said Meinl, who has come out of an institutional investing background. For now, Julius Meinl’s private equity arm is the main backer.

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