Another Star, same ambition to redefine hospitality

Earlier this month, I had the opportunity to sit down with Lennert de Jong, Chief Executive Officer of Another Star, to explore the story behind the company’s new identity, the completion of citizenM’s integration into Marriott Bonvoy, and the landmark USD 685 million refinancing. In the conversation that follows, Lennert shares additional background on the strategic thinking behind the sale of the citizenM brand to Marriott International, how Another Star will continue to own and operate the portfolio under long-term franchise agreements, and where he sees the greatest opportunities for guest experience, technology and growth in this new chapter.

Two major milestones in one year

Four months after completing the integration of citizenM into Marriott International, you are unveiling Another Star and announcing a 685 million US dollar portfolio refinancing. How should owners, lenders and partners read these two moves together? What strategic story are you trying to tell about the next phase of the business?

It's actually 4 months since we closed the deal with Marriott. We completed that technical integration and went live within 4 months, which is a testament to a great start of a relationship. Two teams working hard and finding each other to get something done as fast as no one has ever done this before. After our last citizenM migrated to Marriott we of course had to come up with a new name for the owning and operating group that still owns and operates all citizenM's. A lot of people still don't understand how that dynamic works in Hospitality. They think the brands own and operate these hotels. But it is Another Star that employs people, pay the invoices to the bakery, run the hotels, and arranges financing. One of the biggest events for hotel owners is financing the building, and we had a big one synchronised with the Marriott deal, purely timing coincidence. It is a 14 hotel pack financing of our US portfolio with JPM and KSL for 685M. The strategic story behind this is very simple. We are here to stay, and we look forward to maximizing these 36 citizenM hotels we own and operate. By leveraging our new relationship with Marriott, but also by simply being the most effective and smartest operator. Backed by the confidence of the largest banks in the space.

Focus and scope of Another Star beyond citizenM

Another Star currently owns and operates all existing citizenM hotels under long-term franchise agreements with Marriott. Will the new entity exclusively own and operate hotels under the citizenM brand, or do you see Another Star evolving into a broader platform with additional brands, concepts or asset types over time?

Yes, that is the idea. The future always holds secrets that get unfolded by events we don't even know about yet today, but currently there are no plans to dilute our focus. We are the founder of citizenM, and we know best how to mix efficiencies with extreme customer care and execute that. We want to keep challenging ourselves and with the world evolving around us and changing so fast, yesterday's good is today's mediocre, so we have to keep on our toes and need to do better every day.

Anatomy and objectives of the refinancing

Can you walk us through the key features of the 685 million US dollar hotel portfolio financing facility led by J.P. Morgan and KSL? To what extent is this primarily a refinancing and balance sheet optimisation exercise versus creating fresh capacity for growth, new developments or acquisitions?

With the growth of our US portfolio we added hotels after their openings to different so called "clubs". Now that we have a larger amount of hotels, we consolidated 14 of them into one club and were able to partner up with J.P. Morgan and KSL on this. So it's purely a refinancing.

Marriott platforms and the citizenM / Another Star DNA

With all citizenM hotels now integrated into Marriott Bonvoy and operating under franchise agreements, how does access to Marriott’s distribution, loyalty and marketing platforms change the economics of your portfolio? Where do you see the biggest upside, and how do you make sure the original citizenM DNA and the vision behind Another Star remain clearly recognisable?

As said earlier, we still run all of our hotels, and Marriott didn't pay this amount of money for a brand if they wanted to make big changes to it. We have gone through a lot of change ourselves and are on this journey together with Marriott now, so for sure the future will see change, but that will be all good.Some people are really vocal about things that I consider less trivial. Yes, we gave up independence on booking paths, a guest app, and some other parts of the customer journey that are all secondary to the real customer journey, which is the stay at the hotel.Even with our 36 hotels, the scale is too small to compete on the economics that come with owning the total customer journey.We will get more (less price sensitive) people book direct. Our ADR's will not be eroded by the race to the bottom that big platforms unintentionally cause. Our commissions bills for the business we still get through OTAs are severely reduced. Our company has become less complex, and we can really focus on that core part of the customer journey, which is the stay at the hotel.The biggest upside for me is that citizenM was built for mobile citizens, the frequent travelers of the world. A lot of people have forecasted the decline of the loyalty programs for decades, but truth is they only became more powerful. We have access now to the most frequent travelers of the world, and that will positively drive our topline and margins.

Capital, technology and the next operating frontier

You describe Another Star as a company built around a highly efficient, tech-driven operating model. With the new identity and this significant financing in place, what will be your top one or two investment priorities over the next 24 months in terms of technology, people or product to drive both guest satisfaction and profitability?

AI and AI. You can only be an efficient company if you stop using the horse and cart and get in the car. Back office repetitive jobs, connected to customer requests, are all fully automatable today. We have used dozens of Robotic Process Automations for many years, and even had an RPA company spin out of citizenM, but the rise of AI has allowed us to move into the customer area as well. 96% of all Booking.com and Expedia inquiries are now handled by our own Cody, and Marvin will take care of groups and meetings inquiries this year. Can I get my invoice send to me through whatsapp is not something a human needs to look at anymore. And the list goes on. People will get their answered quickly and we can deploy our humans where they shine best, at the center of our hotels, being nice to other humans, rather than sitting behind a computer doing repetitive work.