HAMBURG (Germany) – Frasers Hospitality Group is expanding in Germany to capture the growing number of well-heeled travellers in Europe’s largest economy.

The Singapore company on Tuesday (Sept 17) opened its first hotel under its luxury brand Frasers Suites in Hamburg .

At the official launch of the S$89 million hotel, chief executive Koh Teck Chuan noted that Germany’s second-largest city drew a growing number of domestic and international travellers every year, underscoring its potential for growth.

“We can’t ignore Hamburg,” he said.

Mr Koh told The Straits Times that occupancy rates were healthy so far, considering that the 154-room hotel received its first guests only in May. The rate hit more than 70 per cent for the first two months though that has come down as winter sets in, hovering at about 40 per cent, he said.

New hotels typically need a year to ramp up, he added.

The rising number of Asian travellers is one group being targeted by the hotelier, a move Dr Dorothee Stapelfeldt, a senator in the Hamburg government, supported in her speech during the launch.

Dr Stapelfeldt said that Frasers Hospitality Group, being Hamburg’s “very first Asian operator”, opened a window into the Asian region. That fitted well into the city’s strategy, she said. Hamburg is one of the busiest port cities in Europe.

“Our tourism business has been growing for many years. We want to give our guests a good welcome to Hamburg, and this hotel is an important piece of the puzzle.”

Hamburg residents, regarded as among the country’s wealthiest, are another group being targeted, said Mr Koh.

Fears of recession have hit the German economy after figures in August showed output contracting by 0.1 per cent quarter on quarter between April and June this year as manufacturers were hit by the trade war between the United States and China, the world’s two largest economies.

Germany’s tourism sector, however, has remained a bright spot for the economy.

It is the ninth most visited country in the world, enjoying “consecutive years of tourism growth”, a Frasers statement noted in May.

Overnight stays in Hamburg grew by 5.1 per cent last year, compared with 2017, it added.

Mr Koh said that the new hotel’s location, heritage and history were taken into consideration when Fraser decided to designate the 200-year-old building as one of the company’s most opulent properties.

The company spent five years restoring the former tax office into a world-class hotel, he said.

Strict German laws on conserving heritage led to much back-and-forth between different groups such as the government, architects and contractors, he added.

Dr Stapelfeldt said that the building process has “added grey hairs” to those responsible for reconciling government guidelines including fire safety rules, building laws and conservation necessities with the company’s desire to build a modern, top-notch hotel.

But the heavy regulations had also been a way to ensure the hotel’s competitiveness in the city, Mr Koh said.

“It’s not easy to find a conserved building and bring it up to this level,” he said, pointing out that competitors would have to buy off-the-shelf or allow for a long gestation period.

Frasers Hospitality Group’s net property income for the third quarter this year dropped 11 per cent year on year mainly because of a drag on its business in Australia.

Its German properties contributed 6 per cent to its net property income of S$25.4 million for the third quarter of 2019.

Gross operating profit in Germany in the same period fell 12.4 per cent year on year to €1.2 million (S$1.82 million).

Frasers Suites Hamburg is its third hotel in Germany. Its other hotels are in Frankfurt and Berlin under a more youthful brand Capri. A Capri hotel is expected to open in Leipzig next year.