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Hotels and hospitality groups
According to the report, typical gross rates per night in these cities are between €117 and €140, with the exception of Dresden (€83). However, for the luxury sector, this rises to €223 per night. For budget travellers, there are bargains to be had: Dresden is the cheapest budget option, averaging €58 a night, which rises to €70 in Berlin and €92 in Munich, according to the report.
Hotel rates per night in key German cities are on the up, due to the increasing popularity of the German market, according to Heidi Schmidtke, executive vice president and head of advisory at JLL Hotel & Hospitality Group in Germany.
‘The hotel market is so buoyant,’ Schmidtke said. ‘There are a lot of big cities in Germany, which means that the potential is shared among them, which keeps prices low. German travellers are also very price sensitive, which is why the budget segment is doing so well.’
This year, hotel rates in Germany’s Top 8 cities – Berlin, Stuttgart, Hamburg, Munich, Frankfurt, Cologne, Dusseldorf and Dresden – are expected to increase on average by 6% to €120 a night, according to Engel & Völkers Hotel Consulting’s (EVHC) ‘Sentiment Report Hotelmarkt Deutschland 2017’, which was published on 2 March.
Stuttgart emerges as the clear winner, with EVHC forecasting an increase in hotel rates there of 18% this year, followed by Berlin with 13%. ‘The positive mood on the part of hoteliers shows that Germany has established itself as one of the most attractive hotel markets in Europe,’ said Andreas Ewald, managing partner and director of hotels at Engel & Völkers Hotel Consulting.
‘Stuttgart is a strong market due to the presence of the automotive industry,’ Schmidtke said. ‘Berlin is very popular with business travellers and tourists alike, who view it as a great weekend break destination.’
EVHC’s analysis covers more than 90% of the cities’ hotel traffic. ‘Our data shows that in Germany’s most popular destinations that there are, overall, attractive room prices on offer. This is an important factor for both hotel operators and investors when it comes to evaluating the attractiveness of a given hotel market, also as a risk diversification play,’ Ewald added.
According to the report, typical gross rates per night in these cities are between €117 and €140, with the exception of Dresden (€83). However, for the luxury sector, this rises to €223 per night. For budget travellers, there are bargains to be had: Dresden is the cheapest budget option, averaging €58 a night, which rises to €70 in Berlin and €92 in Munich, according to the report.
International investors have snapped up a number of German hotels this year. Earlier this month (March), AXA IM- Real Assets acquired a four star hotel in Berlin via a sale-and-leaseback deal with Spanish hotel chain Abba for an undisclosed sum. Also in March, London-based real estate investment firm Queensgate Investments acquired Generator Hostels from Patron Capital and Invesco Real Estate for an enterprise value of €450m. The pan-European portfolio comprises almost 8,700 beds in cities such as Berlin, Hamburg, London, Paris and Rome. Generator intends to open hostels in Madrid and Miami, Florida later this year.
US hotel chains are also getting in on the act. Hilton also announced this month that its investment in Germany is expected to mark an historic high for the group with plans to open six hotels there this year. Following strategic partnerships with German hotel operators Primestar Hospitality and Foremost Hospitality as well as tristar, the German arm of US hotel owner and operator Tristar Hotel Group, Hilton will open hotels in Berlin, Frankfurt, Freiburg, Hamburg, Dortmund and Aachen later this year, at an investment cost of €120m.
Last year was a record year for the German hotel market, with €4.9b transacted, reflecting an increase of 12% compared to 2015 and a tripling of the 10-year average, according to JLL.
