Branded hotel industry

Ruby has her sights set on New York

Michael Struck, founder and CEO of Ruby Hotels.
Ruby Hotels
Michael Struck, founder and CEO of Ruby Hotels.

A few months after the restart of the hotel business in Germany, the brand Ruby Hotels is on course for expansion. Founder and CEO Michael Struck explains his plans.

Michael Struck, congratulations on the Hotel Property of the Year award for the Ruby Luna in Düsseldorf. It is the third hotel in the NRW state capital. How does it differ from the other eleven Ruby hotels?
Each Ruby Hotel has its own character and its own story to tell. Ruby Luna is located in a former office building from the early 1960s, which was architecturally trend-setting in its time, in the middle of Düsseldorf's banking district. At the time, and for a long time afterwards, the building housed the headquarters of the Commerzbank, so the building also played an important role in the 'economic miracle'. The optimism for the future at that time, as well as the belief in science as the engine of real progress, inspired us, and so the stylistic elements of the Space Age characterise the hotel, as do allusions to the economic awakening of the time.

Ruby Luna is located in a listed former Commerzbank high-rise from the 1960s. Is the conversion of real estate the urban development tool of the future and does it represent an opportunity for the hotel industry?
In short, yes. Ruby, with its modular design and construction approach, was conceived from the outset as an ideal partner for the conversion of existing properties. We offer our development partners a high degree of space flexibility, investment and space efficiency.

Their motto is Lean Luxury. In the beginning, a sink next to the bed was criticized. How have you evolved the hotels since the company was founded in 2013?
Fortunately, our guests have seen it differently than the self-proclaimed experts back then. Breaking down conventional bathroom concepts continues to be one of our ways of combining a sense of space with space efficiency, and this still includes visible washbasins in the room area. As long as they are well designed - we keep a respectful distance from the bed headboard, among other things - our guests have no problem with them. We have indeed changed other things, for example, the glass toilet doors will no longer exist in future Ruby Hotels. Just as the needs of our target audience have evolved, so has our Lean Luxury offering. In fact, our Guest Journey has changed at almost every point over the last few years. In the room, for example, through bring-your-own-device solutions to stream your own content on the room TV. We use messaging services before, during, and after the guest stay to serve our guests with the right information at the right time, while opening another channel of dialogue for them. We have built a resident artists program for musicians to enrich the programming in our bars. These are just a few examples of many, with more to come in the coming months. We've used the lockdowns to evolve. Many of our guests belong to the avant-garde, so our aspiration is just the same, to always be one step ahead, and to think two steps ahead if possible.

„We are in a strong position, both in terms of personnel and finances, and can now take advantage of the opportunities that this crisis offers for operators like us.“
Michael Struck, Ruby Hotels.

Your focus is on hotels in large cities. Has this been shaken by the corona pandemic as cities struggle to restart?
All our hotels have started up well again. In cities with high leisure shares, such as Vienna, we are now able to record occupancy rates of over 80 percent again. Frankfurt and Düsseldorf, with their high shares of business travellers and trade fair business, still have room for improvement, but we are confident that occupancy rates will continue to rise here as well.

At the Expo Real real estate trade fair, it became clear that banks have become more reluctant to provide financing. How does this development affect you?
Ruby itself is largely equity financed. What remains, of course, is the impact of the current bank reticence on hotel real estate development. We are helped by two circumstances: firstly, there are banks with hotel expertise, which means they can differentiate more precisely between the planned operators of a hotel property development. Our niche focus, especially in a more crisis-resistant price segment, as well as our structures and processes with significantly lower fixed costs compared to other operators, are very beneficial to us in these times, because they reduce the risks not only for us as operators, but also indirectly for the capital partners on the real estate side. Secondly, in these times, portfolio conversions together with the portfolio holder and its financing bank are another good way of realizing projects. In addition to the technical solutions already mentioned, which offer our partners space flexibility, space and investment efficiency, it also helps us that we, as general planners and contractors, can independently handle such conversions on behalf of the property owner, limiting his risks through time and cost guarantees.

You are also constantly in talks with investors. Do you see any fundamental changes in their willingness to invest and strategy?
The investors with whom Ruby works closely were already focusing more on sustainable, crisis-resistant segments, concepts and operators before the pandemic, and they continue to do so. The pandemic is proving them right.

Ruby is looking to grow strongly, with 18 hotels in the pipeline. Given the problems the pandemic has exposed, isn't the expansion moving too fast?
I assume you mean the problems of the industry as a whole. But the situation varies greatly from segment to segment, and operator to operator. Ruby has proven its crisis resilience in this crisis, and has quickly worked its way out of both lockdowns. The benefits of a focused, fixed-cost, and therefore lower-risk approach have proven themselves in the crisis, as has positioning with a low price entry point and advantageous value for money. We are in a strong position, both in terms of personnel and finances, and can now take advantage of the opportunities that this crisis offers for operators like us.

Are you considering acquisitions?
The strengths we have just mentioned are based on space concepts, structures, processes and systems that set us significantly apart from other operators. With takeovers, we would dilute our advantages and strengths, and buy into the disadvantages and weaknesses of conventional hotel processes and structures. That doesn't make sense.

How has Ruby been able to weather the crisis?
Overall well. The pandemic cost us a lot of money, but fortunately we have strong cash reserves, so we were even able to use the crisis to further expand our team and systems.

With the joint venture Ruby Asia, founded in 2018, you want to expand in the Far East. What is the status?
Our expansion in Asia together with Betterwood Hotel Group continues to move forward. Ruby Asia is about to open five more hotels in 2022, including in Shanghai, with more projects in the pipeline.

Your concept is intended for large cities worldwide. Which other markets do you find interesting?
For the expansion, the focus will initially remain on the European metropolises and capitals. We have just managed to enter the market in Ireland and Italy, and this step is imminent in three other European countries.

Motel One is going to New York in 2022Is that an interesting location for Ruby as well?
It is. Before Corona, we were already in advanced negotiations on this. We will resume those soon.

What does the hotel industry have to prepare for in the coming years?
To continued increasing competition from the parahotellerie. Which is perfectly fine as long as there is a level playing field. The same conditions should apply to all in terms of standards, safety requirements and taxes.

Ruby Hotels

Foundation: 2013 by Michael Struck

Mission statement: To make luxury affordable for everyone / Make it your own story

Size: 12 hotels (2,006 rooms), another 18 in planning or already under construction

Locations: Germany, Great Britain, Austria, Switzerland; under construction: Italy and Ireland

Shareholders: Michael Struck; ECE Group; Soravia Group; Franger Investment; Ocean Link, Michael Hehn.

Awards: Hotel Ruby Luna in Düsseldorf was voted hotel property of the year 2021