When Event Hotels closed its acquisition of the Keystone portfolio comprising 17 ibis and Mercure hotels across Germany totalling 2,021 rooms, the group noted it was one of the largest investments in its 30-year history. While the deal size is striking, the strategy behind Event Hotels’ sharp escalation of its presence in Germany is even more so.
Why?
Event Hotels didn’t stumble into this portfolio, and while some investors continued to debate the right timing to re-enter parts of the European hotel market and hesitate due to myriad market factors, Event Hotels already had its answer.
According to Michael Bauer, Director Development & Acquisition, what made Keystone a good opportunity was a mix of diversification, evidence of resilience, and strong fundamentals.
But perhaps the biggest indicator was performance. “What we saw was a very good cash flow coming from these assets and a very strong rebound after the Covid crisis. We noticed that those assets bounced back very quickly, which is a very good indicator in a cyclical business.”
This echoes what Germany’s national tourism data has shown. According to Germany’s Federal Statistical Office, there were 496.1 million overnight stays in 2024 across all accommodation types, surpassing pre-pandemic highs, with hotels seeing rises in overnight stays compared to 2023.
Bauer also noted that roughly 70 to 75 per cent of the portfolio’s revenue is generated from rooms rather than F&B, a factor made particularly appealing given ongoing cost pressures on labour, energy and food.
“What we generally like is a strong focus on rooms versus F&B, which this portfolio certainly has,” Bauer stated.
He added: “We also like a decent size of the individual assets, so that there is, on an asset-by-asset basis, the economies of scale. And this portfolio really ticks the boxes. We also see some upside potential that can be unlocked by investing the capex.”
Risk and reward
But Germany’s hospitality market is not without risk including macroeconomic headwinds, geopolitical uncertainty, and exposure of the portfolio to broader cycles in corporate demand, business travel and international travel flows. However, Bauer sees the biggest risk already fading in the rear-view mirror.
“One big market risk, namely the huge increase in supply between 2019 and 2023 in some markets is already behind us,” he says. “Markets have digested that supply and are stabilising. the individual markets are already stabilizing again, having digested the new supply, so that risk is no longer imminent”
He adds: “While the economy has an impact, we have high hopes for government investment and the impact of that investment.”
Looking across the portfolio, Bauer notes strong growth prospects in the south. “Munich is very strong. Nuremberg is a secondary market but a very strong hub covering corporate, trade-fair and leisure business.”
He adds that beyond a few nice to have markets like Berlin, most of the other markets represented in the portfolio still have upside with the appropriate measures to drive revenue and profitability.”
Big plans
These measures include upgrades through refurbishments of public areas - with particular focus on 90-bed ibis Paderborn and 50-bed ibis Bamberg which will undergo full renovation, back of house and sustainability upgrades and technological improvements.
“Most of the assets are in perfect shape but some have not received investments during the last hold period so we will take care of those,” Bauer says.
At Paderborn, Event Hotels will even convert underused conference space into a handful of additional rooms. “Nothing dramatic - maybe three or four rooms,” he adds.
Turning to back of house maintenance, Event Hotels intends a refresh with more efficient systems to improve reliability and sustainability credentials. The portfolio will also enjoy technological investment to ease cost pressures, with Event Hotels planning to roll out a suite of tech-enabled initiatives including self-check-in terminals in “welcome lounges,” marketplace-style retail offerings for guests, robots to assist staff with F&B deliveries and cleaning, and voice-bots supporting reservations at the central reservation centre.
Accounting and back-of-house infrastructure are also being modernised, including the roll-out of software (Microsoft Dynamics) to automate up to 90 to 95 per cent of invoice processing, with the portfolio to be plugged into a centralised system.
“We are all aware of cost pressures. Skilled staff is hard to get and we want hotels to run as efficiently as possible,” Bauer says.
One of the biggest wins from acquiring a 17-asset platform is the ability to scale the company’s centralised services model. And the Keystone portfolio strengthens that model significantly.
Bauer says: “We centralize all of the back of house services of the hotels such as IT, sales marketing, revenue management, e-commerce etc in our head offices so that the hotels can really focus on the guests. The portfolio helps to build a broader basis for those services, and to be even more efficient than we have been so far, because the services are brought to the hotels at cost.”
And while robots will be used to reduce the burden presented by widespread labour shortages, streamline operations, and enable front-of-house staff to focus on guest experience, Bauer stresses the implementation of a model that doesn’t prioritise technological efficiency above the human touch.
“Having the right balance is the best way for it to work,” he says, insisting on a hybrid model where technology augments rather than replaces human service, preserving guest experience while improving operational reliability.
These tech upgrades, Bauer says, stem from Event Hotels’ owner & CEO Anders Braks’ long-held vision. “He is very interested in that area. We started moving into the cloud two to three years ago. We have put all our data into the cloud now in order to be able to use it as efficiently as possible. By the end of 2026, we will be where we want to be.”
Deal pricing
While Bauer won’t disclose pricing, he notes it was competitive.
“There were three parties in the end, and they were apparently in the same range,” he says.
But what ultimately made the difference and resulted in them snagging the deal for themselves? Trust and execution capability, Bauer says,
“Our competitive edge was our experience with portfolio acquisitions and complex structures. think that experience in previous acquisitions and processes really helped to build trust in the seller that we will execute, and that also helped us to scale down the due diligence that we that we needed in the process,” he explains.
He added: “We demonstrated that we could close the transaction faster than competitors. Strong transaction security and good experience…that helped in the end.”
Beyond Germany
While the group’s largest footprint is in Germany, Bauer insists they remain pan-European opportunists.
“We have a strong portfolio in the Netherlands of 25 hotels, a large hotel in Vienna, one in Florence. In the past we’ve been active all across Europe. Wherever there is a good opportunity, we will go after it,” Bauer says.
And for him, a good opportunity means that the entry price must have a healthy relation to the NOI currently produced. “Not future NOI,” he stresses. “Those opportunities are a bit scarce these days.” He adds that while the UK remains interesting, it is highly competitive.
Event Hotels’ rationale behind the acquisition of the Keystone portfolio was based on a confidence in Germany’s underlying fundamentals, and a willingness to modernise ageing assets through strategic capex and technological transformation. The coming years will reveal just how much value the group can unlock, and as confidence starts to return into the German market – with Cushman & Wakefield reporting a 68 per cent increase in transaction volumes to around €1.58 billion between January and September 2025 compared with the same period in 2024 – it seems there’s optimism in the air.