Hotel Petersberg

Government guest house is wearing out its welcome

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The chateau-like government guest house near Bonn hosted kings, queens, and shahs in its heyday. Source: Reuters

Germany’s roads and bridges may be needing repairs and police and border controls may be understaffed. But somehow the federal government has found €35 million ($41 million) to renovate and refurbish the luxury hotel on the Rhine that it owns, and that served as the official guest house when the West German capital was Bonn. Critics of the government and Berlin’s ministerial accountants are not amused.

The Hotel Petersberg, on a hill with a breathtaking view of the Rhine valley, has hosted dignitaries ranging from Queen Elizabeth II to the Shah of Iran. It has an historic background, having served as the headquarters of the Allied High Commission after World War II and the venue for the Petersberg Agreement, a first step toward granting West Germany its sovereignty, as well as many other significant events.

It was, and remains, a functioning hotel under management of the Steigenberger Group, but until 1999 government guests got priority booking. It is wholly owned by the government and as recently as the climate conference in October it hosted delegates and German cabinet members. While most of the government in a reunified Germany was relocated to Berlin by 1999, several ministries remain in Bonn and it retains special status as a “federal city.” Nonetheless, the hotel is the only commercial building owned by the government, an anomaly that has prompted calls for Berlin to divest itself of the property.

Limited access and a helicopter landing site made the hotel ideal from a government security standpoint.

Easier said than done. The government spent two years looking for a buyer but gave up in 2013. The planned costly refurbishment may in fact be the prelude to a sale. In the meantime, Steigenberger’s management contract has been extended to 2024 from its original expiration in 2019, and the hotel chain has every intention of bidding for a renewal.

In any case, the need for remodeling has become urgent. “Without such a renovation,” hotel manager Michael Kain said, “the hotel was no longer operable.”

Offices are being converted to guest rooms, raising the total to 112 from 99. Small rooms that domiciled chauffeurs or security details for distinguished guests are being combined to form 45-square-meter (500-square-foot) suites. Wellness areas will be expanded, and dining facilities will be upgraded, and will include a bistro and a piano lounge.

The target clientele, according to Mr. Kain, will be visitors from western Germany seeking a weekend of hiking or just relaxation. The planned room rates, from €165 to €225, hardly seem outrageous, especially when compared to many European capitals. Occupancy, currently at 55 percent, some 20 points below the industry average, is also expected to go up.

The site on Petersberg mountain was a summer home for a merchant family for most of the 19th century, until it was converted into a hotel that was only accessible by a specially-built rack railway. In 1912, Ferdinand Mühlens, scion of the family that made the original 4711 eau de cologne, converted it into a spa that remained open until the end of the 1960s. The West German federal government, which had already used the privately-owned hotel as a guest house from 1954 on, acquired the property in 1979. Even then, it was controversial, seen as a costly project for the government. Only in 1990 was the hotel opened again, after being virtually rebuilt. Limited access on a single road and a helicopter landing site made the hotel ideal from a security standpoint and it regularly hosted government guests.

But even back then, privatization of the site was already being discussed. Local officials urged the government not to sell, seeking to bolster Bonn’s role as a secondary capital. Though Steigenberger says they are making money from the management contract, the hotel requires government subsidies to cover losses each year. In 2012, the government injected capital of €500,000 and in the past year subsidies of €1 million were given, as well as write-offs of €778,000.

Local officials are turning the former guard house into a small museum to reinforce their support for keeping a government presence in the Petersberg. In Berlin, however, budget experts are questioning why the government should be subsidizing a grand hotel when its needs could now be met with commercial lodging.

It is, as the Germans like to say, an “expensive bit of fun” and it seems the Petersberg’s days as a government-owned guest house may be numbered. “Whether Petersberg remains a federal property in the long term is an open question,” Berlin officials said.

Christoph Schlautmann covers transportation and tourism for Handelsblatt. Darrell Delamaide, an editor for Handelsblatt Global in Washington, DC, adapted this article into English. To contact the authors: schlautmann@handelsblatt.com and d.delamaide@extern.handelsblatt.com.

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