Interview with Otto Lindner, Chief Executive Officer, and Andreas Krökel, Chief Operating Officer, Lindner Hotels AG

9 min reading time

Published on 05/09/12 - Updated on 17/03/22

Founded in 1959 by Otto Lindner Sr, an architect who wished to diversify his activities, the Lindner group now includes several complementary businesses: architecture, real estate, engineering and hotel operations. The Lindner Hotels division was entrusted to Otto Lindner Jr, who has the upper hand over an inventory of 33 properties in Germany, Austria, Switzerland, Belgium, Spain, Slovakia and the Czech Republic, or close to 4,600 rooms in the 4* and 5* categories, and close to 2,000 employees. The group realized revenues of €175 million in 2011 and continues its development through franchising. Portrait of a growing group.

According to your biography, your first vocation was to be an airline pilot. Was it difficult to abandon this project by joining the family business? Otto Lindner:

It is true that originally I was tempted to work in aviation, especially after receiving my German and American pilot licenses when I was 20. But the idea of working as an airline pilot did not fully intrigue me. When I had the opportunity to keep my connections to the world of aviation while beginning my career in hospitality that seemed to be the best decision to make.Is it important to find personal legitimacy in the family business?Working in a business that my father built from the bottom up represents a particular challenge. I worked with him for several years quite intensively and today, as Chairman of the Board of Directors, he is still very closely connected to Lindner Hotels & Resorts. The identification phenomenon a person feels when working in a family business is decidedly higher than when one is a simple employee or manager. But I believe this personal connection to the business also constitutes a particular challenge, particularly since private life and professional life are interconnected. Today, the Lindner group is owned in equal shares by four siblings. We all work in different divisions and we get along perfectly well. Our goal is to perpetuate this understanding into the next generation as well.How did your initiation into the hospitality trade come about?I did classic professional training in hotel management and received my diploma in Economics and Management from the University of Cologne. Internships and rapid integration in the family business’s different projects helped me get familiar with practical operations.You played on the national military water-polo team, did this give you a particular mindset?In addition to the team spirit I developed through team sports, this sport certainly gave me a healthy rigor towards myself and my adversaries. You learn to lose like a good sport as well as to win using fair play without mistreating the adversary beyond the sport. These values continue to shape me today.With thirty or so hotels operating under the brand Lindner Hotels, do you think you have attained a critical size?If you had asked me that question a few years ago I would have said that with 25 hotels and €150 million in turnover the critical size necessary to take advantage of the synergy and be able to perform well internationally had been reached. It has been a long time since we did that, but through globalization and technological development the critical size is now higher. I would venture to say that it is around 50 hotels and €250 million. We are working on this and moreover want, in the near future, to be present with our brand in ten European markets. To do that it is important to export our skills and the expertise of a German group to the favorite destinations of German tourists. In what cities or regions in Germany is your presence still not strong enough?We are present on all the major markets in Germany. We are just missing a hotel in Munich. We are working very hard there and want to open a themed hotel, since one does not exist there yet. Otherwise on the domestic market we are moving ahead cautiously, studying several possibilities and as the opportunities arise. This is also true for takeovers of hotels in difficult situations that we are able to revive.International development remains modest, are you being consciously prudent or is there a lack of means?We are already present in seven European countries, our arrival in the eighth and ninth countries are in the concrete preparation phase. Generally speaking, we are focusing on capitals in these countries and we will then be able to use these springboards to target other locations. But the imperatives imposed by the creation of a foreign company in order to operate hotels are demanding. A medium-sized company, such as ours, initially implies good control over the financial and organizational aspects. Moreover, the requirements are enormous in order to achieve a successful operational integration of the new properties in a foreign country.When it comes to developing outside Germany, do you have a preference for Eastern European countries, or capitals in Western Europe?We have no preference. We just took over a hotel in Prague, we are building a hotel in Bratislava and we are busy with a project in Budapest. We are, moreover, currently negotiating the takeover of a hotel in Brussels and the construction of another hotel in Amsterdam.What led you to develop a franchise division?The success of our hotel management model on our market made us do this. If you think just about the Procurement, Human Resources, Distribution and other divisions, they are problems that each and every hotelier must think about and develop and it is difficult to do so alone. We are able to provide these services ready to use. Did the news attract the attention of hoteliers and investors? Yes, we are in negotiations with a few operators …Do you want to encourage the development of the franchise in Germany as well as internationally?It is most certainly in Germany, our base market, that we are able to offer the best services, with the greatest utility to our partners. What is your approach to hotel marketing on the social networks? Andreas Krökel: We will establish ourselves strategically on the social networks starting August 1st by creating a fully dedicated division, which will be directly connected to the executive committee. We believe, in fact that there is strong potential in terms of sales and communications on the different “Social Media” channels.Do you think this is an important strategy for the future?Absolutely, it will play an important role in the marketing mix. We will be able to contact our clients directly, reach our target clientele of tomorrow and increase the brand’s notoriety. Social Media channels will also be important for reaching new employees.Do you wish to connect online distribution with your hotels’ social networks?We are planning a strong interconnection of all our distribution channels. Through them we will be able to design and diffuse our marketing messages on the different channels corresponding to each respective division.Today, what share of your global sales is through Internet channels?This is a strong priority and currently 80% of reservations by our business clientele are made via internet. Through new online tools we also want to offer well-being services in order to generate more online reservations for leisure hotels. Our investments in e-commerce are very high.Are sales high on your own site www.lindner.de or are they higher through intermediaries?Currently most of our reservations are through intermediary channels, which we are very close to. But the goal of our e-commerce strategy is to redirect most of our reservations to our own site.Are you satisfied with your “Energy Save” program, launched in 2006? Otto Lindner: Until now we have been perfectly satisfied with the program. Not only because we have saved close to 300,000 euros per year in energy costs, (made possible by simple operational measures requiring little investment), but also because what we have learned from this “Best Practice” project allows us to improve our results in the new Lindner hotels, whether they are new constructions or takeovers of a pre-existing hotel. With all that, Energy Safe became the basis for efficiently managing our hotel. Do you think you can take your sustainable growth policy further?We do not pretend to carry out these changes in a disinterested manner out of the simple respect for natural resources, because there are nonetheless economic demands that make energy savings measures necessary. That said, we are acting as responsible managers, by integrating the environmental issue as much as possible. But I think that the marketing campaigns of a few other actors in the hotel industry are clearly exaggerated. For example, when a hotel proselytizes by insisting on using Yak dung from Himalaya as a source of heat – and, moreover, is congratulated for it – I think the debate has been skewed in the wrong direction. The technological progress and increased pressure on costs are the two elements that will generate major innovations in the future.What is your evaluation of how the hotel market is changing in Germany?The last two years were very positive, but there is nonetheless the sword of Damocles that threatens the industry with a possible new increase in VAT on revenues from hotel accommodation, with a parallel increase in sojourn tax in an increasing number of cities. The subject of readjusting VAT, implemented by nearly all the European neighbors in light of the current difficulties reigning over the markets, led to an irrational public debate in Germany because of tactical electoral considerations or simple misunderstanding of the reality in Germany. This could result in a cancellation of the drop in VAT parallel to the maintenance of sojourn tax. That would mean a 17% increase in prices (incl. VAT) that hoteliers will not be able to pass on to guests. This danger casts a shadow on efforts made by German hoteliers and will lead to disastrous market conditions.Will the year 2012 be as good or better than 2011?Germany’s markets are distinctive from each other, but generally speaking the year 2012 is slightly better than 2011. We are taking advantage of the strength of German export and the resulting international travel.Are average daily rates high enough?Room rates in Germany are always one third lower in comparison with other major European countries. And it is surprising to see that with these low rates we get by all right.Has the drop in the TVA made it possible to make new investments or to readjust prices down?A study was ordered by the German Hotelier Association IHA, for which 5,194 of the 45,000 existing hotels answered. Results show that these hotels alone invested close to one billion euros in 2011. Close to 10,000 additional employees, full-time, part-time, or in apprenticeships were hired. When this is balanced alongside some 500 million euros in lost tax revenues as a direct or indirect result of the drop in VAT, the outcome is clearly positive. This trend toward investment continues in 2012. For the year 2012 alone, I can also affirm that for Lindner Hôtels & Resorts, we will invest some 7 million euros in renovation works. The result is also positive for clients. 50% of revenues related to the drop in VAT are used to the customer’s benefit. Service quality improved in the “hardware” while additional employees did the rest.What do you expect from your summer promotional operation: “Wir haben Ihren Urlaub!” (We’ve got your holidays!)? Andreas Krökel: Like all our advertising campaigns, this one supports two major goals: improve the brand’s notoriety through visible actions that stand out among our competitors; increase revenues for our business hotels during this holiday period when the volume of reservations is low. With our current campaign we are hoping to achieve an increase in reservations of 10%.Is this the first time?For a long time now we have been doing ten to twelve major campaigns a year. Last year at the same time another campaign that was just as extensive as «Wir haben Ihren Urlaub» was baptized «Kilometer-Aktion», for which clients received a rebate of 10% for every hundred kilometers they drove to reach our property.Do you plan to take advantage of the tendancy for Germans to choose domestic holidays?

Otto Lindner: I believe strongly in pursuing domestic travel in Germany.This trend has been growing for several years. Thanks to the increase in competitiveness made possible by the reduced VAT, we will be more competitive in terms of price and product. We will thus be able to convince vacationers that the quality of vacations is clearly better and more ecological in their usual well-being environment than through a long-distance journey to a foreign culture.
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