NEW YORK— In a case of boomerang thinking, a German lodging company— which took its formation 24 years ago from the American concept of hotel rooms and residential units co-existing in the same building— is now looking to bring its own brand of apartment hotels to the U.S. According to Frank Voss, COO of Munich, Germany-based Derag Hotels and Apartment Living, a subsidiary of 55-year-old real estate company Derag Group, the company is enthusiastic toward the hotel/apartment combination. It currently has 10 properties in Germany and one in Vienna, representing approximately 2,500 rooms. The four-star properties run from boutiques to convention hotels, with a flagship property in Weimar, the five-star Grand Hotel Russischer Hof zu Weimar. Derag acquired the 200-year-old, 126-room property eight years ago. Unlike the condo-hotels that are proliferating here, Derag owns each of the facilities, and leases the apartments on a long-term basis, offering the services not only of the hotel component, but acting as managers for the residences. That means stocking refrigerators, offering laundry services, housekeeping, etc. Similar to condo-hotels, Derag struggled to easily define the concept for the customer. “We started with boarding house and everybody said, ‘No. Don’t do it.’ Then we came to ‘serviced apartments,’ but that concept is not very well known in Germany. Apartment house indicates a doorman. So it was not so easy to find the right word for this product,” he said. Complicating matters is Derag’s model. With the exception of Weimar, which is strictly hotel rooms, the properties are a mix of serviced apartments, guestrooms and suites. The apartments include more workspace, a kitchen or kitchenette, trouser press, iron and iron board, wireless LAN Internet access. “So you can stay five days, five weeks, five years, whatever you want,” said Voss, noting 80% to 90% of guests are business travelers, similar to extended-stay hotels or corporate-lease hotels, such as Marriott’s ExecuStay here. Nonetheless, the mix is “very useful” for Derag, said Voss. “We can always sell the apartment as a hotel room. For example, tonight in Munich, we have a 90% occupancy and there are still some apartments left. Normally, we will keep a reserve of apartments as the hotel booking is one night and the apartment booking could be 10 nights. But at 6 p.m. we say no one is coming to book 10 nights, so we sell these apartments as hotel rooms.” Those booking an apartment will get a slightly different experience than in the hotel room. The lease units have kitchenettes and when they are sold as hotel rooms, management brings in a mini-bar as an added feature. “Most of the apartments are like a maisonette, so we sell them as a junior suite or suite,” said the COO. Guests who opt for the leased apartments, if they intend to stay more than 90 days, must actually register the unit as a second residence, noted Voss, who said the situation can get tricky in cases where guests fail to pay for the space. Just as in the U.S. there are laws regulating length of stay in hotel rooms and tenants’ rights in leased residential apartments. “When you’re living in a flat and you get in trouble with money, the owner is not allowed to throw you out. In an apartment house (the term Voss uses to describe the Derag business model), you say: ‘Hey, we are like a hotel and when you cannot pay, there’s the door; go out. But the resident can then turn around and say he or she has been staying there six months or more as in a flat and they can go to the law [to sort it out].” It’s a situation he expects to be less complicated in America. Voss said while a lot of current business is national and European, more and more business is coming from America, thus making their concept more widely known and creating greater brand awareness to pave the way to bring the concept to the United States. “From 2004 to 2005, we had 25% more occupancy from the American market,” he said,
