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EBRD helps apartment-hotels expand in eastern Europe

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Related links Hungary homepage Property homepage ORCO APARTHOTELS [Project Summary Document]

Fresh and contemporary look for new Aparthotels.

Aparthotels (apartment hotels) are a well-established form of accommodation in the West. However they're just arriving in the EBRD region thanks to entrepreneurs such as Jean-François Ott. A €14 million equity deal with the EBRD will help Mr Ott's Orco Property Group expand its chain of aparthotels beyond its Czech and Hungarian bases.

Aparthotels are halfway between short-term, expensive hotels and long-term, cheaper rented flats. They're aimed at business travellers who work on extended projects of up to one year and offer hotel services such as reception, concierge, housekeeping, laundry, breakfast and minibars.

The aparthotels industry is the fastest growing hospitality sector in the United States and western Europe and Orco is determined to spread aparthotels throughout the EBRD region.

A decade ago, against all odds and the advice of colleagues, Mr Ott quit his brokerage job and moved to Prague to invest in the CEE property market. His company is now a commercial property leader in Prague and a successful niche real estate player. With a large portfolio of offices, residential buildings and luxury hotels, Orco has built up an excellent reputation across the region.

On top of its aparthotels already operating in Prague and Budapest, Orco planned to develop its new niche business with sites in Warsaw, Tallinn and Bratislava. To do this, they needed an investor but found none were willing to finance a vehicle specialising in this type of real estate in our region.

"And that is where the EBRD stepped in," said Eric Maillebiau, the Bank's operations leader for the aparthotels project. "Other investors do not want to take both new market and new product risks. That is why it is a perfect match between the EBRD and the company. It is the Bank's mandate to help apply in the region the ideas that proved to be successful in Western economies and Orco, in true entrepreneurial spirit, is very keen on introducing and promoting a new product in the local property market."

"This is great news for the chosen CEE cities," said Silke Katzenmeier, another member of the Bank's project team. "Just like hotels in the past, it is hoped aparthotels will facilitate new business activities in these locations and possibly bring new foreign investment into the city and country."

"It was exciting to work with Orco as we had to be creative and ended up with quite an innovative deal structure, which should yield very good financial returns," said Mr Maillebiau. "What kept us going was a hope of making an impact by promoting a new form of hospitality services in CEE."

Earlier this month members of the Bank's board stayed at the aparthotel in Budapest when they travelled there for a consultation. They used business facilities for a press conference and enjoyed spacious rooms and their homey feel. They also met with the Orco management. Scott Clark, board director for Canada and Morocco and a spokesman for the group during the visit, described the aparthotel experience as very enjoyable and "a refreshing change from international hotel chains".

So the next time you are assigned to a one-month project in Tallinn or Warsaw, you will be able to choose some soothing sounds for your home away from home. There's the promising bleeping of your microwave, the friendly humming of your washing machine and even the soothing tones of your favourite music. You and your family may be apart but you'll definitely feel at home.

20 March 2003