CEO Barbara Muckermann on Kempinski’s new direction

INTERNATIONAL REPORT — Kempinski Hotels this spring made its first property acquisition in more than 50 years, purchasing Augustine Hotel Prague, a historic property in the city center. It will be rebranded under the Kempinski flag later this year and is part of the company's “asset-heavier” strategic shift toward direct ownership of landmark properties. Travel Weekly hotels editor Christina Jelski spoke with Kempinski Hotels CEO Barbara Muckermann about the luxury brand’s new direction and what’s to come.

Q: What drew Kempinski to the Augustine Hotel?

A: When the opportunity came about — it was around last summer, actually — we thought, this is ideal. It’s a European capital, and Prague is booming. The property is a 13th-century convent, so it’s ideal for a heritage brand like Kempinski. And it’s quite small, at about 101 keys. We’re reducing the key count to 98, but it’s small enough to do it fast, because we’re eager to show the world what “Kempinski 2.0,” as we call it internally, will be.

Q: What does this “Kempinski 2.0” approach entail?

A: One of the things that we are doing differently from everyone else is we’re looking at every city, every project from the eyes of the historian. We do have an internal heritage office with a resident historian. As soon as we signed Prague, we sent him there, and he [took] two months to really understand the history of the convent, the history of the monks, the history of the city and find out how this deep history [can be reflected in] the new product.

For example, we are now briefing the restaurant concept developers. Our brief was to really work with fermentation, because this was a convent that has been working with fermentation for over 1,000 years, producing the royal beer, but they were also producing amazing liqueurs.

Q: Are existing Kempinski properties also being updated to reflect this 2.0 vision?

A: Our Kempinski Nile property is undergoing a complete renovation right now. Together with the owners, we are completely renovating the hotel, but we are also launching a very exciting beach club on the Nile. The location is so spectacular that it really made sense to make the investment and bring it to the next level.

Q: Why is Kempinski becoming asset-heavy at a time when many are going asset-light?

A: Kempinski aims to reclaim their space as the European leader in luxury hospitality. We need to create an exclusive collection of individual properties, and it is much easier for us to go and acquire controlling interests in them, in order to be able to redevelop and reposition them to the Kempinski standards faster than doing it through the asset-light route. It’s also helpful that we are a private company with a really good balance sheet.

The asset-light advantage really comes out if you’re a public company, because the stock exchange really loves asset-light businesses. But in our case, we’re privately owned; we don’t need that. And this strategy allows us to really access deals that are not on the market for our competitors.

Q: Where is Kempinski looking next?

A: Our first objective is really to increase our European density, which is why Prague comes immediately into it. Second, we need more leisure properties. When I arrived, 77% of the Kempinski keys were urban city keys, and that’s way too much. We are actually negotiating [a project right now for] a whole medieval village in Tuscany. That’s really the kind of leisure destination we’re focused on.

And third is to increase our [presence in markets where we have strength], like Southeastern Asia and the Middle East. Also, the U.S. is our second source market strategically. We are seeking to actually enter the U.S. market with the right hospitality project. We are trying to secure, ideally, a pipeline of two to three assets to really help our [foray] into the country.

This story originally appeared in Travel Weekly.