LyvInn hybrid meets Porgy and Bess

FRANKFURT, Germany – George Gershwin wrote, and Ella Fitzgerald among many others sang, “Summertime and the LyvInn is easy . . .”

Admittedly, the actual ‘Porgy and Bess’ lyric is “living” but the reference works to encapsulate the thinking behind Navneet Bali’s newly opened 164-rooms hybrid hotel-hostel in Frankfurt, Germany. In more than one sense, LyvInn is “easy.”

LyvInn is a brand designed for those who want informal, flexible, functional, and convenient accommodation at a price which makes booking decisions simple, said Bali, former CEO and chairman of budget brand Meininger Hotels. Bali’s new venture is backed by Blantyre Capital, a London-based firm with €2.3 billion under management.

The inspiration, said Bali, came from his time with Meininger, which now has 35 hostel properties. A little like Meininger, LyvInn will cater to short-stay travelers but it is going further.

Alongside the dormitories and similar overnight backpacker rooms it will have more conventional en-suites for those who, perhaps with a contract-work commitment for a few weeks, need a temporary home away from home.

Expansion plans

Bali is eyeing locations including Berlin, London, Dublin, and Budapest. “LyvInn’s aim is to operate in every major European city,” he said. With backing from Ballatyre, he added, “We are now looking to actively grow the portfolio.”

Single property acquisitions are most likely, said Bali, though the economies of scale that come with portfolio purchases would be attractive if multi-location opportunities arose. The Frankfurt LyvInn was previously a Meininger outlet though it seems unlikely Meininger will provide LyvInn with a pipeline for many, if any, more deals.

LyvInn hopes to refurbish existing hotel and hostel properties with around 100 to 350 rooms while also converting existing buildings, say offices, of between 3,500 to 12,000 square meters. Properties may have freehold, long-term ground leases, and operating leases.

Investment interest in LyvInn may be helped since the concept is part-realized in the 35 similar Meininger hotels. More so, since Bali confidently expects occupancy rates to be in excess of 90%. Pragmatism, meanwhile, defines conversion and refurbishment investment. Works will be site specific, adapting existing floor plans, using fixtures and fittings which are available and affordable at the times required.

The company spent around €11,000 per room to get the Frankfurt LyvInn up and running. It’s a sum which includes the expenditure on communal spaces and public areas. Room rates, said Bali, will come in at around €100 a night for hotel accommodation and €35 for a hostel bed.

Most of the income – around 80% – will come from accommodation with most of the rest derived from food and beverage. Events are envisaged too, so there will be some venue hire revenue on top.

Bali identifies deal completion as the biggest challenge. Gaps in buy/sell valuation instincts make life far from easy. Shifting macro-economics, notably around interest rates and associated cost of capital calculations, are headaches. Buyers want margin for higher macro risks. Sellers, looking at what seem to be health trading conditions, think the risks are exaggerated.

Meanwhile, if the LyvInn concept is as good as Bali indicates, competition will stiffen. Premier Inn, Ibis, and smaller brands have made a compelling case for budget accommodation.

That said, the Frankfurt LyvInn is seen as a good springboard. Johann Scheid, investment executive at Blantyre, said, “We are looking to grow the portfolio under the LyvInn brand in Germany and across Europe over the coming years.”

Funding for Frankfurt came wholly as equity – a practical tactic given the desire to get the ball rolling. In time, there’s likely to be a refinancing commensurate with medium-term ambitions to build 50/50 equity and debt structures.

“Navneet’s track record as operator and Blantyre’s ability to provide flexible capital solutions are an excellent match,” Blantyre Senior Adviser George Kountouris added.

More on the concept

LyvInn is being marketed as providing “affordable and flexible accommodation targeting city explorers, groups, families, young professionals, and entrepreneurs.” The hotels will have flexible room structures combined with communal spaces such as co-working desks and social areas for both extended-stay Lyv and short stay Inn customers. With a focus on stylish design, the operator will focus on offering experiences for their customers to connect with each other and to local communities and business districts.

Bali sees a “huge,” largely unserved market for young professionals among so-called Millennials and GenZ-ers. And while he hopes the style and price will attract older travellers as well, Bali said LyvInn is targeted specifically at younger travellers who want to stay, work and play in cities richly populated by ‘start-up’ enterprises and vibrant nightlife. LyvInn is, for Bali, about facilitating experience.

Living and indeed LyvInn - is likely to be harder than the musical impression given by Gershwin, Fitzgerald, et al. Nor will it always be “summertime” in terms of trading. The strategic tune played by Navneet Bali and his band, however, is catchy.