Brown Hotels sometimes calls itself the biggest hotel brand you’ve never heard of. The Israel-based hospitality company, founded in 2010, is a power player in its home country, and is now making moves in southern Europe.
The company’s expansion strategy is based on brand growth through opportunity. In the micro sense, that means looking around for deals in terms of individual properties for sale. But on the macro scale, it’s a matter of considering destinations that may be suffering from hospitality real estate hits due to Covid-19 or other economic and political factors.
|Brown Hotels is undergoing a major expansion |
Brown Hotels evolved out of the desire to create dwellings that not only showed visitors the real culture and creativity of the city's youthful population, but also to expand the nightlife and neighborhood hangouts for locals. During its decade in existence, the Tel Aviv-based company has opened more than 16 hotels around Israel. The properties operate under five different brands, each encapsulated by a female icon. For example, Brown Beach Houses, sporting a 1950s vibe, according to founder Leon Avigad, pays homage to Brigitte Bardot while Lighthouse, the modern “Work Hard, Play Hard” brand, uses Paris Hilton as inspiration.
In 2016, the company opened its first property outside of Israel, the Brown Beach House in Trogir, Croatia. Avigad said the destination made sense, given its proximity to headquarters and its Mediterranean climate. The success of that resort spurred further investigation of expansion in southern Europe.
|Brown Beach House, Croatia|
“For us, it was very clear that when expanding into Europe, it was more natural to start in places that look and feel like Tel Aviv,” according to Avigad.
After Croatia, he started looking into Greece, deciding to earmark the country as its next destination for heavy investment. Brown purchased its first two hotels there in 2018.
“Greece seems even more dynamic than Croatia, and I think Athens is poised to be the next Berlin,” said Avigad. “Plus, Greece has much more to offer than just islands. The mainland is so rich with culture and experiences.”
Seeing an underdeveloped market on the mainland, and an economy ripe for investment, Brown decided to go all in.
“When we started looking, the real estate market was not very strong, but at the same time, the destination was strong and demand steady,” noted Avigad. At the same time, he said “the Greek government was becoming very receptive to new businesses and new investment.”
While the government was not offering financial incentives per se, “they were more open to foreigners and trying to make it easier for everyone to invest.”
|Brown Acropol Athens|
All of the legwork in Greece started paying dividends in July, when Brown Hotels announced the opening of its first three properties in Athens. The Brown Acropol, DAVE Red Athens and Villa Brown Ermou all represent individual design concepts, and are the first of seven new properties by Brown Hotels set to open in Greece by the end of 2021. Brown Hotels will subsequently expand to Thessaloniki, Cyprus and Corfu, and then by 2023, will have a total of 50 properties in Greece.
|Villa Brown Ermou, Athens|
Next up is Hungary. The company has identified a quartet of hotels in Budapest for redevelopment. The first of them is slated to open in 2023. The company is also scouting “happening cities” like Berlin, that fit with the company’s hip urban brands, and looking in Italy for both resort and city hotel opportunities. However, Avigad says the brand will not enter any new market unless it can develop at least four properties concurrently, with a minimum total of 400 rooms.
In the meantime, Brown Hotels continues to expand in its home country. Six hotels, two in Jerusalem and four in Tel Aviv, are opening in Israel this year, and another three are slated to open in Tel Aviv by the end of 2022.
The original version of this article appeared in Hospitality Insights.